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
They will peak once the Fed is done tightening. Slowing demand to bring down inflation without significant pain is “not getting any easier”, but markets (still?) price in a soft landing.
Europe | Monetary policy normalization pushes up risk premia
The European Central Bank (ECB) has taken a further step in its process of normalizing monetary policy by announcing at its latest meeting that it will end its asset purchase program in July, and that it is prepared to pick up the pace of its rate hikes to contain inflation, in line with other central banks.
Turkey | CPI surprised on the downside but maintained an increasing trend
Consumer prices increased by 2.98% in May, much lower than market consensus (4%), which resulted in an annual figure of 73.5%. We expect consumer inflation to accelerate above 80% in the coming months before slowing down to near 60% given positive base effects in the last two months of the year.
In the Spanish banking system, 2022 will go down in history because several events will occur (or are already unfolding) whose impact on the industry’s results are hard to gauge. Two such events are the war in Ukraine and the end of the grace period for ICO-guaranteed loans.