While Mexico’s headline inflation stabilised at 7.3% y/y in the first half of March, the further rise in the core rate to 6.6% y/y suggests that the central bank is still struggling to keep a lid on price pressures. With inflation likely to edge higher in the coming months, we expect that Banxico will raise the policy rate to 8.50% in this cycle (from 6.00% now), which is a more tightening than the consensus expects.
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