After the Bank of Mexico (Banxico) increased its interest rate by 75 base points, and inflation accelerated in the first half of June, analysts expect the central institution to make a hike of the same magnitude at its next meeting. of monetary policy.

“The statement made it clear, or has already begun to point out, that it would be a rise of the same magnitude. The probability is high, but it also depends on various things that happen along the way,” said Jessica Roldán, chief economist at Finamex.

The factors that could affect the decision of the next monetary policy meeting of the central bank, scheduled for August, are the decision of the Federal Reserve (Fed) of the United States next month, the inflation data that is given between now and August , as well as their impact on price expectations for the end of the year.

In this sense, Andrés Abadía, senior international economist at Pantheon Macroeconomics, indicated that they expect the next rate hike to be 75 base points, to then increase it by 50 points in both September and November, and close the year at 9.50%. level never seen before.

“The deterioration of external conditions is forcing Banxico to rise more than the majority of the members of the board and Andrés Manuel López Obrador would have allowed under normal circumstances. They will have to boldly raise rates to control inflation expectations,” he added.

Last week, the United States Federal Reserve (Fed) increased its interest rate by 75 basis points, which opened the door for Banxico to do the same at this meeting, especially when seeing that inflation accelerated to 7.88%. in the first half of June, its highest level in more than two decades.

“Right decision”

The 75 basis point increase in Banxico’s reference rate was a good move, especially to try to anchor inflation expectations, analysts said.

“Banxico’s decision is aimed at trying to anchor or align expectations in the medium and long terms. Thinking about whether this can help lower current levels of inflation is difficult, but it is difficult to seek to anchor future expectations”, explained James Salazar, deputy director of Economic Analysis at CIBanco.

He added that what the monetary authority is concerned about is that agents – investors, consumers, companies, among others – begin to incorporate high price levels into their future decisions, for which they are interested in anchoring expectations.

“The reality is that, as analysts, we do pay close attention to whether inflation was 10 hundredths above what was expected, for example; but the reality is that the blow from inflation is strong, and that’s how people feel it, regardless of whether it’s at 7.70 or 7.80%,” he said.

He explained that the Bank of Mexico sent a message that it is acting with greater force to combat inflation, and showed that it can continue with these rate increases or even higher ones, depending on the need.

The move fits with the market’s expectation that the bull cycle will top out at 9.50%, which could be achieved if the rate rises 50 basis points in each of the next three meetings and 25 basis points in December.

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