The further rise in Mexico’s headline inflation rate to 8.2% y/y in the first two weeks of July means that Banxico is all but certain to deliver another 75bp hike in interest rates, to 8.50%, at its next policy meeting in August. Inflation is probably now close to a peak but it will remain above the 2-4% target range for some time and, as a result, we expect rates to be taken up to 10.00% by end-2022.
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