By Juan Montes and Anthony Harrup 

MEXICO CITY -- Mexico's central bank surprised investors in late June by raising interest rates by a half a percentage point, matching a similar move in February and prompting many to speculate that this aggressive stance could be the norm to support a weak and volatile peso.

But Agustín Carstens, the Bank of Mexico chief, said the bank's goal is where it has always been since it became autonomous from the government in the 1990s: to maintain the purchasing power of the Mexican peso by keeping a tight rein on inflation.

"The fact that our last two rate moves were of 50 basis points in no way sets a precedent that from now on if there's a need to make an adjustment it will be 50 basis points," Mr. Carstens said in an interview on Friday with The Wall Street Journal at the central bank's headquarters.

The peso, the world's eighth most-traded currency with a daily volume of $135 billion, has been one of the emerging-market currencies that have depreciated the most against the U.S. dollar since the beginning of the year, losing around 7%. It hit a record low two weeks ago of around 19.50 pesos to the dollar. The peso has recovered some ground since.

As an easily traded currency often used as a proxy amid global economic and political uncertainty, the peso has been hard hit this year by concerns over the U.S. Federal Reserve's next interest-rate move, China's economy, and more recently, Britain's vote to leave the European Union.

Mr. Carstens acknowledged the central bank had to act in recent months to send a clear signal that authorities are worried a weak peso would end up affecting consumer prices, but made it clear the bank's goal isn't to drive the exchange rate. "Some say the Bank of Mexico has somehow gone from inflation-targeting to exchange-rate targeting. That is completely false," he said.

Some analysts even speculated that beyond a "magic threshold" of 19 or 20 pesos per dollar, the bank would raise rates or even make discretionary interventions in the exchange market selling dollars -- a rare action for one of the most orthodox central banks in Latin America. The bank did that in February, selling $2 billion.

"I can say it without any doubt: a regime of that nature [seeking exchange rate targets] has not even crossed our minds," Mr. Carstens said.

Inflation is still below the central bank's 3% target, but the central-bank chief said the bank acted bluntly because the weaker peso is already having an impact on certain food and imported goods, and it wants to keep that from contaminating other prices such as services.

"The bank had to send a clear signal that we're worried about the impact of a weak peso on prices," Mr. Carstens said. "We have to start attacking these early pressures."

Given the close economic links between U.S. and Mexico -- both countries trade $1 million in goods every minute -- the Bank of Mexico matched the Fed's rate increase last December to keep local yields attractive and avoid further pressure on the peso. But Mr. Carstens said the bank's stance won't necessarily be linked to what the Fed does.

"There are a lot of factors that affect the Fed and the Bank of Mexico differently. ... A clear case was the Brexit: It generated a flight to quality that strengthened the dollar, lowered inflation expectations in the U.S. and gave the Fed more room to normalize [monetary policy]. In Mexico, we had the opposite effect," he said.

For Mr. Carstens, keeping inflation low is critical for Mexico and other emerging markets to preserve economic stability in a distressed world that is struggling to return to steady growth rates after the 2008 financial crisis.

"The tunnel has been much longer than expected or desired, and the vote of Britain to leave the EU has complicated the situation even more," said Mr. Carstens, who also chairs the policy advisory committee of the International Monetary Fund and the Global Economy Meeting at the Bank for International Settlements. "There is still a lot of uncertainty out there."

But Mr. Carstens seemed optimistic that negotiations between Britain and the EU will be constructive, and seek to minimize the impact of Brexit on the world economy.

He praised his colleagues at the Bank of England for having prepared enough liquidity measures in the event of a Brexit shock. "Until now, incidents have been minor," he said.

Some observers have wondered if the world's main central banks could intervene in a more coordinated way to shore up the global financial system. Mr. Carstens seemed skeptical.

"There is a lot of dialogue among the different central banks." he said. "But it's difficult to think of additional cooperation, for example regarding monetary policy, because the different countries confront very different economic cycles. Each looks to its main obligations."

Write to Juan Montes at juan.montes@wsj.com and Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

July 08, 2016 17:49 ET (21:49 GMT)