Mexico | Banxico slows the pace of hikes and hints at possible end of the hiking cycle

Summary

Banxico raised the policy rate by 25 bp to 11.25%, acknowledged that inflation was slowing, revised down its short-term headline inflation forecasts, took a less hawkish tone and left the door wide open for a pause at the next meeting in May

Key points

• Key points:
• Banxico revised down its headline inflation forecasts for the next two quarters and brought them closer to our projected path
• It dropped the language pointing to future hikes in its forward guidance, and instead suggested that future moves will be inflation-data dependent, and will take into account “the monetary policy stance already attained"
• We now think that the odds of an 11.25% peak for the monetary policy rate increased sharply today

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