BBVA, in the report Mexico Situation 1Q22, He pointed out that “core inflation will keep Banxico in restrictive mode” and expects a rise of 50 basis points and that the interest rate will end the year at 7%.
The authority raised its benchmark interest rate in December above what the market expected, to take it to 5.50%, citing a deterioration in forecasts for inflation. It was the fifth raise in a row.
The country’s headline inflation would have slowed in January to an annual rate, according to a Reuters survey, but it is still well above the official target of 3%, while core inflation would have climbed to its highest level in more than two decades. The data will be published on Wednesday.
Meanwhile, US inflation for January will also be released this week and if they are high they could further boost the Fed’s plan to raise interest rates starting in March.
“The chronic weakness of the economy will force the central bank to take the reference interest rate to sufficient levels to cushion the effects of the imminent financial turbulence derived from the start of the rate hike cycle by the Federal Reserve,” said Alfredo Coutiño, director of analysis for Latin America at Moody’s Analytics.
In addition, if the US central bank accelerates the pace of tapering “it would force Banico to take a much more restrictive stance,” Profuturo said in his report. Global Economic Outlook 2022 Outlook: Growth vs. Inflation.
For its part, Banorte said in a report: “Our estimate for another increase of this magnitude (50 bp) is based on several factors, including an additional upward adjustment in the annual comparison in core inflation, despite a moderation in the general”.
Banco de México will publish its first monetary policy statement of the year on Thursday at 1:00 p.m. It will be the first time that the new governor of the entity, Victoria Rodríguez, former undersecretary of Treasury Expenditures, participates.
With information from Reuters
