The larger-than-expected fall in Mexican inflation, to 3.4% y/y in June, will be welcomed by Banxico and means that interest rates will remain on hold in the near term. That said, we think June probably marked the trough and, in contrast to Banxico, we think inflation will trend higher over the coming months. Coming alongside the hawkish shift by the Fed, we think that Banxico’s next move will be a hike.
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