Mexico Seen Tightening Again

Mexico will likely hike the overnight rate by 25bp to 8.25% August 15, according to Credit Suisse, following a larger-than-expected upward revision to base-case inflation. “Additional rate hikes will depend on the dynamics of market inflation expectations,” says Credit Suisse. “The latest market survey showed that the median forecast for the overnight rate at year-end 2008 is 8.25%,” it adds. It projects headline inflation will rise 0.53% month-on-month, while core inflation will increase 0.42% in August.