Pace of rate hikes in Mexico could slow down

According to Jonathan Heath, deputy governor of the Bank of Mexico (Banxico), the cycle of rate increases is not over yet. Nevertheless, after four consecutive increases of 0.75%, there is now the possibility of a slowdown. Heath also said that all current indicators could point to a key rate peak soon. 

Banxico raised interest rates to a record 10% in the current tightening cycle. That step was aimed at lowering inflation, which was well above the bank's target average of 3%.

The deputy explained the slowdown would only get evident if global commodities and energy prices fell. Heath also pointed to declining food costs and transportation costs as signs of deflation.

Mexico has relied heavily on fuel subsidies to help contain consumer prices. President Andres Manuel Lopez Obrador said without this measure, annual inflation would have reached 14%.

However, nowadays along with lower global energy prices, the work of subsidies will point to slower inflation in Mexico.