Banxico 75bp hike a done deal; all eyes on hints of a near end of the tightening cycle

Summary

Banxico will continue following in the footsteps of the Fed and will lift the policy rate by 75bp, to 10.00%. The main question going forward is whether Banxico will stick to its strategy of matching every additional Fed hike or will start to discuss decoupling as soon as in December

Key points

• Key points:
• Headline inflation is likely now past its peak, but core inflation has not yet started to soften and edged up in October
• With tomorrow’s 75bp hike, the real ex-ante policy rate will be 4.50%. With inflation set to soften ahead, the monetary policy stance will become much more restrictive fast
• Will Banxico hint that the tightening cycle will soon come to a close? We think it should but we do not expect clear signals in the statement

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