Prior to the Banxico decision, January inflation data from Mexico had come in hotter than in December, and higher than expectations.
Headline CPI was +0.68% m/m
- expected 0.64%, prior 0.38%
for the y/y 7.91%
- 7.89% expected and 7.82% prior
Core 0.71% m/m
- 0.69% expected and 0.65% prior
core y/y came in at 8.45%
- expected 8.41%, prior 8.35%
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A 25bp was expected from the Bank, but the unanimous decision delivered a 50bp rate hike. From the statement:
- "Given the dynamics of core inflation, on this occasion it is necessary to continue with the magnitude of the reference rate adjustment of the previous policy meeting, in order to be in a better position to tackle a still-complex inflation environment"
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Central bankers are close-knit and insular global community. Subject to groupthink too. Its not difficult to imagine this aggressive move being duplicated if inflation comes in hot in other countries.
Apols, I couldn't resist reusing this one.
