Mexico: Banxico likely to hike overnight rate by 25bps to 6.75% - TDS

The research team at TDS points out that today in Mexico, we have the Banxico rate decision and even though the consensus is for no change in the Overnight Rate, but 9/26 respondents in the Bloomberg survey expect, like TDS, a 25bps hike to 6.75%.

Key Quotes

“We believe that, though inflation expectations have shown nascent stabilization, inflation momentum remains and that there is greater capacity for a policy error / loss of credibility if Banxico pauses now, only to hike again later.  We bring forward our prior call for a 25bp hike of the Overnight Rate in June to May, leaving June contingent on future inflation outcomes, and the focus that Banxico places on the U.S. – Mexico rate differential.”