The stronger-than-expected rise in Mexico’s headline inflation rate to 8.6% y/y in the first two weeks of August raises the risk that Banxico pushes through another 75bp interest rate hike at next month’s Board meeting. For now, though, with the Fed set to the slow the pace of tightening and signs that Mexico’s economy is struggling, we think Banxico will raise rates by 50bp to 9.00%.
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