On Thursday, the Bank of Mexico rose the key interest rate by 50 basis points to 10.5%, following the same hike from the Federal Reserve. According to the Research Department at BBVA, Banxico will decouple from the Fed in 2023 and they see lower growth and inflation in Mexico. 

Key Quotes: 

“We expect lower growth and inflation in 2023. GDP would grow 3.0% in 2022 driven by the manufacturing sector. We stick to our 0.6% GDP growth forecast for 2023 but with an upward bias considering the 3Q22 data, INEGI’s revisions, and the effect of nearshoring.”

“November will mark the peak of core inflation; headline inflation is already declining. We are more optimistic than the consensus for 2023.”

“We anticipate that Banxico will decouple from the Fed in 2023; we expect the start of a rate cut cycle by the third quarter of next year.”

“We expect the exchange rate will be 19.6 pesos per dollar by December 2022 and 20.1 pesos per dollar by the end of 2023.”

This article was originally published by Fxstreet.com.Read the original article here.

LEAVE A REPLY

Please enter your comment!
Please enter your name here