📝Banxico Hiking Cycle Not Over Yet: Deutsche Bank

Banxico, as expected, last week hiked the overnight rate by 25bps and delivered a unanimous decision.

The risks to inflation also changed. The main upside risk is still the persistence of core inflation at elevated levels. The second most important risk is now a peso sell-off followed by cost pressures and potential energy or food price increases.

Despite the more dovish statement, Banxico hasn't brought the hiking cycle to an end, and we see at least another 25bps hike in May. Regardless of easing the toughness of the statement's language, Banxico purposefully left the door open for another hike. Our base case scenario sees the first rate cut in Q4, 2023.- Deutsche Bank