Macroeconomic Forecast Mexico
May 2008 | Macroeconomic ForecastsIf you would like to subscribe to Mexico Monitor and gain instant access to this article, please click here to subscribe.
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Following disappointing data from the first half of April, central bank Banxico's recently-released quarterly inflation report revised up its inflation expectations for 2008. The short-term inflation outlook is looking less favourable, and markets were quick to respond to Banxico's unexpectedly hawkish report, which revised up its Q208, Q308 and Q408 CPI projections by 50 basis points (bps) (to end the year at 4.25-4.75%), and by 25bps for Q109, even though it retained its 2.0-4.0% inflation target for end-2009. While a 25bps cut from 7.50% in the overnight lending rate is still possible by end-2008 if the economic outlook takes a significant negative turn during the coming months, we now feel that that the likelihood has shrunk considerably given the inflation picture.