Banco De México Likely To Pick Up Pace Of Rate Hikes After November Inflation Print

  • Fitch Solutions, now expects the Banco de México (Banxico) will hike its benchmark rate by 50 basis points, to 5.50%, during its December 16 meeting, due to the risk that recent upside inflation surprises de-anchor inflation expectations. Fitch forecast that inflation will likely end in 2021 at 7.50%, up from 7.00% previously. 
  • In 2022, it is expected that Banxico will hike its rate to 6.50%, from the previous forecast of 6.00%, as inflation remains above-target and financial markets expect US monetary policy to tighten. 
  • Deputy Finance Minister Victoria Rodríguez Ceja’s appointment to lead the Banxico board from January 2022 onwards increases uncertainty around monetary policy direction, with risks to both the upside and downside.

(Source: Fitch Solutions)