Banxico will act “more forcefully” and deliver, a widely anticipated, larger 75bp hike

Summary

There is (now) a wide consensus that Banxico will match Fed’s expected hikes through December, taking the policy rate to 9.50% by year-end

Key points

• Key points:
• We anticipate that Banxico will revise its headline inflation forecasts upwards, as well as its core inflation expected path
• We do not expect Banxico to continue to follow the Fed in early 2023
• Banxico´s tightening will result in strong headwinds to the economy, something that, considering the time horizon in which monetary policy operates, will become evident next year

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