Banxico will score a third increase of 50 points in the interest rate: BofA and Barclays

The Governing Board of Bank of Mexico (Banxico) will raise the rate by 50 basis points this Thursday, March 24, to leave it at 6.50%, in accordance with the expectations of economists from Bank of America Securities (BofA Securities) y Barclays.

We expect a hawkish statement that will argue for its decision on rising inflation expectations, also highlighting the path of core inflation and the rate hike cycle in the United States, commented from New York, the economist for Mexico and Canada of BofA Securities, Carlos Capistran.

Hawk, in monetary language, means that the monetary policy position is prone to raising rates in the face of inflationary pressurehigh rates that tend to make financing more expensive and restrict leverage conditions.

The strategist highlighted that they now expect a variation in inflation of 6% this year, with the risk of episodes where it will exceed 8%; this in the face of supply shocks that come from abroad due to the situation in Ukraine and Russia, as well as by incorporating the internal pressure that structural inflation brings, which is the underlying one.

Under this scenario, the expert foresees that the Governing Board of the Banxico revise its inflation forecasts upwards again, which will eventually lead the central bank to leave the rate at 9 percent.