Economics
Breakevens Show Banxico May Need Another Inflation Reality Check
- Mexico central bank raised CPI forecasts; remains below market
- Central bank hiked 25 basis points as expected in split vote
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Mexico’s central bank accepted economic reality and raised its inflation forecasts in Thursday’s rate decision. The pricing of inflation-linked bonds indicate it didn’t go far enough.
Policy makers increased their year-end estimate to 5.7% from 4.8% and pushed the date of convergence to the 3% target into 2023 from 2022. Even so, traders and economists doubt the dovish-leaning central bank can deliver on those expectations.