Headline inflation in Mexico will continue to fall back over next couple of years, but strong wage growth means that it won’t return to Banxico’s 2-4% tolerance band until late-2024. Against that backdrop, we think the central bank will deliver two more 25bp interest rate hikes, to 11.50%, and will not turn to loosening until the very end of this year. Our interest rate forecasts lie well above the consensus and what is priced into financial markets.
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