The fall in Brazilian inflation, to 10.4% y/y, in mid-December is likely to be followed by further declines in the coming months. Inflation in Mexico edged up in the same period, to 7.45% y/y, but we also expect it to drop back early next year. Nonetheless, we think that central banks in both countries will maintain their current pace of tightening with rate hikes of 150bp and 50bp respectively in February.
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