Banxico's less hawkish hike opens policy flexibility - TDS

Banxico raised rates by 25bps to 7.50%, in line with expectations, notes Sacha Tihanyi, Senior Emerging Markets Strategist at TDS.

Key Quotes

“Despite pushing out inflation convergence by one quarter, the policy message was marginally less hawkish given that Banxico downgraded somewhat its focus on the U.S. - Mexico policy rate differential, opening up policy flexibility at the April meeting.”

“We see currently a 50-50 risk for further tightening in April, dependent on two more monthly inflation/inflation-expectations prints that will be in hand by then, and any inflation pass-through risk from potential MXN downside.”