Mexico city at goldenhour

Mexico Monetary Policy August 2022

Mexico: Banxico hikes again in August

On 11 August, the Governing Board of the Bank of Mexico (Banxico) opted to raise the target for the overnight interbank interest rate by 75 basis points to 8.50%, marking the fifth hike this year.

The Bank’s decision was part of an ongoing attempt to keep price pressures under control and stop inflation expectations from becoming de-anchored. Both headline and core inflation have risen further above the Bank’s 2.0–4.0% target range in recent months, and the Bank commented that inflation expectations for 2022 and 2023 had increased. Moreover, Banxico once again markedly revised up its own inflation forecasts for the coming quarters, and now sees headline inflation peaking at 8.5% in Q3 compared to 8.1% previously.

In its communiqué, the Bank suggested it would continue to raise rates ahead, although the language was more dovish than at the prior meeting. Banxico stated simply that it would “assess the magnitude of the upward adjustments in the reference rate for its next policy decisions based on the prevailing conditions.” Our panelists currently see over 100 basis points of extra tightening by year-end, although forecasts range from 50 to 175 basis points.

On the outlook, Itau Unibanco analysts said:

“Our end of year policy rate forecast is at 9.75%, with a 50-bp hike in the next meeting. While the magnitude (50-bp or 75-bp) of September’s policy rate hike will depend mostly on next Fed’s policy move, stubborn inflation increases the odds of one (or more) member voting for keeping the pace (75-bp) regardless of the Fed decision.”

The next monetary policy decision will be announced on 29 September.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest