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MNI Banxico Preview - May 2022: To Stick to 50bps Clip

Executive Summary:

  • Consensus sees a 50bps hike to 7.00% - inline with prior pace
  • Stubborn inflation, a tightening Fed and need to stabilize MXN behind the decision
  • Estimate for inflation convergence could slip from Q1 2024
Full piece here:


Banxico are expected to raise rates by a further 50bps to a new cycle high of 7.00% at the May meeting, retaining the pace of tightening from the previous three policy meetings. A 50bps move is consensus, despite a further deterioration in the inflation outlook, which is expected to prompt another upward revision to CPI forecasts at this meeting. A sharper than expected upward revision to forecasts could prompt a small number of policymakers to opt for a 75bps hike this month, but they’re expected to be among the minority.

A 50bps rate rise at this meeting would be consistent with the rationale behind the previous three 50bps hikes in this cycle: shoring up domestic financial markets (particularly the MXN), actively heading off rising inflation expectations and keeping an eye on a tightening Federal Reserve, which has accelerated their respective pace of hikes.

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