The increase in Mexican inflation in July, to 2.7% y/y from 2.5% y/y in June, is unlikely to prompt the central bank to raise interest rates again at Thursday’s MPC meeting. But with inflation likely to breach the central bank’s target over the coming months, and the peso vulnerable to further falls, we remain comfortable with our view that interest rates will rise by a further 50bp this year, probably in Q4.
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