Banxico outlook, Brazil GDP, Colombia election

Given the Fed’s hawkish shift and the recent sell-off in the Mexican peso, we now think that Banxico will step up the pace of tightening with a 75bp rate hike next week, to 7.75%. Elsewhere, in Brazil, the recently-released activity and survey data have prompted us to revise up our already above-consensus 2022 GDP growth forecast, to 2.0% (from 1.3%). Finally, Colombia’s presidential election on Sunday between left-wing Gustavo Petro and populist Rodolfo Hernández on Sunday looks too close to call. One key point is that neither candidate seems committed to tighten fiscal policy to reduce medium-term public debt risks. World with Higher Rates - Drop-In (21^st June, 10:00 ET/15:00 BST): Does monetary policy tightening automatically mean recession? Are EMs vulnerable? How will financial market returns be affected? Join our special 20-minute briefing to find out what higher rates mean for macro and markets. Register now