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Scotiabank on Peru, Mexico Central Banks

LATAM
  • Scotiabank expect Peruvian inflation to keep the BCRP on its toes, pushing it to deliver another 25bps hike at the Dec 07 meeting. Their Lima economists forecast that CPI rose 0.4% m/m and 8.4% y/y in November, roughly matching the prices gain in October as inflation remains unreined above 8%.
    • As the BCRP has stated, rate hikes will likely continue until inflation is convincingly decelerating—so far, it has only shown modest signs of doing so.
  • Banxico’s projections will inform its appetite to keep pace with the Fed over the coming months while the domestic backdrop, namely core inflation, provides enough support for continued rate increases.
    • Scotiabank anticipate that Banxico will hike by 50bps next month and in January, with the path beyond that point determined by the performance of inflation (and expectations) as well as the Fed’s cycle.
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  • Scotiabank expect Peruvian inflation to keep the BCRP on its toes, pushing it to deliver another 25bps hike at the Dec 07 meeting. Their Lima economists forecast that CPI rose 0.4% m/m and 8.4% y/y in November, roughly matching the prices gain in October as inflation remains unreined above 8%.
    • As the BCRP has stated, rate hikes will likely continue until inflation is convincingly decelerating—so far, it has only shown modest signs of doing so.
  • Banxico’s projections will inform its appetite to keep pace with the Fed over the coming months while the domestic backdrop, namely core inflation, provides enough support for continued rate increases.
    • Scotiabank anticipate that Banxico will hike by 50bps next month and in January, with the path beyond that point determined by the performance of inflation (and expectations) as well as the Fed’s cycle.