Banxico points to keeping rates steady

Summary

As expected, Banxico acknowledged high inflation and rising risks, but at the same time noted that is still expecting inflation to converge to 3.0%, now in 2Q22.

Key points

• Key points:
• The wording of the statement had some (hawkish) tweaks but points to a long pause in spite of acknowledging upside inflation risks
• Clearly, Banxico has become more worried with inflation, but does not seem to be overly concerned
• In our view, the statement balanced well inflation concerns with the expectation of inflation pressures winding down in coming months
• We continue to expect Banxico to keep rates steady throughout 2021-22 as opposed to the more hawkish view priced in by financial markets

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