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CIBC: Expects Banxico Terminal Rate of 8.75%

BANXICO
  • The announcement left the door open for a larger rate increase in the upcoming meeting. With a more hawkish statement than previously anticipated (driven by new external supply shocks), we expect Banxico to implement a 75 bps rate hike in its June meeting, followed by two additional 50 bps rate increases in each of August and September.
  • However note that while we recognize the need to tackle current inflation dynamics, our main arguments in favour of a shorter tightening cycle and a terminal overnight rate of 8.75% remain in place.
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  • The announcement left the door open for a larger rate increase in the upcoming meeting. With a more hawkish statement than previously anticipated (driven by new external supply shocks), we expect Banxico to implement a 75 bps rate hike in its June meeting, followed by two additional 50 bps rate increases in each of August and September.
  • However note that while we recognize the need to tackle current inflation dynamics, our main arguments in favour of a shorter tightening cycle and a terminal overnight rate of 8.75% remain in place.