Inflation in Mexico has dropped back over the past year but rapid wage growth continues to fuel strong underlying price pressures and means that the headline rate won’t return to Banxico’s 2-4% tolerance band until late-2024. Coming alongside pushback from the Fed against a March rate cut, it’s unlikely that Banxico will feel comfortable embarking on an easing cycle next week and interest rates are likely to be lowered more gradually than we had previously thought over the course of 2024-25.
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