Banxico must remain hawkish in the near term - TDS

Mexico’s inflation expectations are at their highest level in months, and equivalent to the heights achieved in the post-U.S. election surge, points out Sacha Tihanyi, Senior Emerging Markets Strategist at TDS.

Key Quotes

“Though we estimate that Mexican inflation remains on a trajectory to achieve close to the 3% target by the end of 2018, Banxico must remain hawkish in the near term.”

“We look for another 25bps hike on February 8th, with future hikes contingent on the January (and future) inflation/expectations outcomes.”

“MXN remains unattractive despite valuation arguments, as investors appear neutral to negative on adding Mexican fixed income exposure until the key NAFTA and electoral risks are clarified.”