Economic Analysis - Monetary Tightening Coming To An End - APR 2017
BMI View: Mexico ' s central bank will continue to tighten monetary policy in the coming months in response to a sharp spike in inflation in January and the prospect of continued exchange rate volatility. However, we expect just one more 50bps interest rate hike to 6.75%, before disinflation and a strengthening peso will pave the way for the start of monetary easing in 2018.
Banxico will remain hawkish in 2017 on account of sharply higher inflation in H1 and persistent currency weakness.
Thereafter, slowing economic activity and a bottoming of the exchange rate will pave the way for monetary easing in 2018.
Banxico's Unwavering Commitment To Price Stability Mexico - Central Bank Policy Rate And Inflation Source: Banxico, BMI
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