Bank of Mexico's positive inflation outlook implies end of rate hike cycle

The Bank of Mexico posted an optimistic inflation forecast on Wednesday. It is noted the cycle of rising interest rates, which began in June 2021, is nearing completion.

The Mexican Central Bank reported a peak in overall inflation in Q3, respectively, a marked decline is expected to be in the next reporting period until late next year.

According to official data, overall annual inflation in Mexico reached 8.14% in the first half of November, while a month earlier it was about 8.53%.  However, the base price index, which excludes some volatile food and energy prices, continued to rise up to 8.66%

Goldman Sachs economist Alberto Ramos explained that the rate hike cycle will likely end with a final nominal discount rate of about 11%. That result may correspond to a real-ex-ante policy rate 200 basis points above the central rate cap of 3.4%.