The rise in Mexico’s headline inflation rate to 8.2% y/y in July, coming alongside the stronger-than-expected Q2 GDP figures released in late-July, mean that Banxico is almost certain to hike interest rates by 75bp, to 8.50%, when it meets on Thursday. Inflation is set to 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 year-end.
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