The bank re-instated their rate differential with the Fed in a unanimous decision
- Banxico raised rates by 75bps to 9.25%, alongside expectations
- The bank re-instated their rate differential with the Fed in a unanimous decision
- Consensus sees further tightening in November, with terminal rate eyed at 10.50 – 11.00%
The bank made sharp upward revisions to both their headline and core inflation forecasts, pushing projections higher by 0.1ppts for Q3'22, 0.5ppts for Q4'22 and higher by 0.8 - 1.1ppts through 2023. While, the longer-term inflation views were kept broadly unchanged, they remain above the top-end of the bank’s target.
Sell-side consensus is forming around September’s hike bringing Banxico closer to (but not at) the peak of the tightening cycle, with most seeing a further Fed-matching 75bps hike in November. Peak rates are now forecasted at 10.50 – 11.00%, with the bank reaching this level at the end of Q1 next year.