Sizable upward revision to core inflation forecasts points to more tightening

Summary

The tightening cycle will likely continue, but we stick with our more dovish view than priced by markets for 2022 .

Key points

• Key points:
• Banxico hiked the policy rate by 25bp to 4.75%; the wording of the Statement was broadly unchanged
• However, two major changes point to more tightening
• We stick with our base scenario of one more 25bp rate hike in November but our bias now shifts to an additional one to 5.25% in December

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