Monetary policy latest publications
The Board of the Central Bank decided to increase the monetary policy rate from 6.75% to 7.00% in October. The Bank tightened the monetary policy stance understood as the real ex-ante policy rate to a restrictive level.
The inflation targeting regime adopted by Banxico in 2001 became the monetary policy strategy that has prompted relevant improvements in communication and transparency of its goals, plans and policy decisions.
Chinese economy has experienced a bumpy recovery after the Shanghai lockdown was lifted. We lowered our 2022 prediction from 4.5% to 3.6%.
Consumer prices rose by 3.08% in September, below both market consensus (3.15%) and our expectation (3.7%), which led to an annual inflation of 83.5%. We expect consumer inflation to be 70% at the end of the year as base effects would start a disinflation path.
Banxico will most likely stick to following in the footsteps of Fed’s upcoming hikes .
There’s a lot of tightening still in the pipeline: Banxico will likely match the (now larger) Fed’s expected rate hikes .
The updated “dot plot” reinforces the Fed’s “higher rates for longer” approach to bring inflation down to 2%. Another 75bp hike is now more likely than not in November and rates will likely go higher than previously thought.
September 20, 2022
US | Fed will deliver a third 75bp hike and back up hawkishness with updated projections
The Summary of Economic Projections (SEP) will point to less confidence in the soft-landing outcome and a challenging road to bring back inflation to below 3.0% levels as the Fed “keeps at it until the job is done”.