The surge in Mexico’s inflation to 7.05% y/y in the first two weeks of November – the highest since 2001 – was partly a result of unfavourable base effects, but underlying price pressures were also relatively strong. We still think that the central bank will stick to its gradual pace of tightening with another 25bp rate hike, to 5.25%, at its December meeting but the chance of a more aggressive move is increasing.
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