The rise in Mexican inflation to a fresh 18-year high of 6.8% y/y in December will probably lead to further calls for Banxico to raise rates again at its policy meeting on 9th February. While another hike is possible, with inflation set to fall sharply in Q1 – and Governor Alejandro Díaz de León acknowledging as much in an interview yesterday – we are sticking to our non-consensus call for rates to remain unchanged at 7.25%. Either way, the big picture is that the tightening cycle is close to an end.
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