Banxico shifts to a steeper tightening pace

Banxico raised the policy rate by 75bp to 7.75% and signaled that another hike of this size was possible at its next meeting, but also that a larger hike was unlikely

Key points

• Key points:
• Banxico revised sharply to the upside the expected path for both headline and core inflation, as we anticipated
• With high odds that the Fed will repeat the 75bp hike in July, we continue to expect Banxico to repeat today’s (75bp) move at its next meeting in August
• We expect the policy rate to peak at 9.50% in this cycle

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