Banxico points to keeping rates steady

As expected, Banxico acknowledged high inflation and rising risks, but at the same time noted that is still expecting inflation to converge to 3.0%, now in 2Q22.

Key points

• Key points:
• The wording of the statement had some (hawkish) tweaks but points to a long pause in spite of acknowledging upside inflation risks
• Clearly, Banxico has become more worried with inflation, but does not seem to be overly concerned
• In our view, the statement balanced well inflation concerns with the expectation of inflation pressures winding down in coming months
• We continue to expect Banxico to keep rates steady throughout 2021-22 as opposed to the more hawkish view priced in by financial markets

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