Economics
Mexico Traders Bet Rates to Rise Much More Than Officials Signal
- Rate markets point to over 100 bps of increases ahead in 2021
- Inflation spike leads Banxico to switch to monetary tightening
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Traders are betting Mexico’s central bank will continue to fight inflation aggressively after it unexpectedly increased interest rates following a pickup in prices.
After Banco de Mexico raised its key rate to 4.25% in a split decision, rates traders are now betting that more aggressive increases are coming, with around 131 basis points of tightening priced in on top of the quarter-point hike the bank implemented Thursday. And the next quarter-point hike could come as soon as August, according to market pricing.