Barclays Expect Banxico To Accelerate Tightening

Barclays: Inflation Forecast Targeting Consistent With 50Bp Hike

• Banxico could increase the pace of rate hikes to 50bp in November 11, from 25bp at its previous three meetings.
• Barclays think that Banxico will likely revise its Q4 21 inflation forecasts, which could affect its forecast trajectory - this amid important pressures from core and energy prices.
• Board members, particularly governor Díaz de León, as well as deputy governors Espinosa and Heath, have stressed that Banxico is no longer working under a simple inflation target regime, but rather an inflation-forecast targeting one.
• This should be consistent with increasing the pace to 50bp at least once. After the November meeting, if we do not see more inflation surprises, Barclays believe that Banxico could go back to a 25bp pace.