In Mexico, ongoing growth acceleration along with the pass-through from currency depreciation in tradable goods prices suggest further tightening of the current economic situation as well as inflation. Despite downward revisions in the short term forecasts, the growth numbers have continued to surprise the market to the upside.

The services sector has grown at a strong rate on the back of real consumer spending. The labour market continues to grow and is expected to strengthen consumption growth and wage-push inflation, unless investment sentiment weakens.

"Following the FOMC's recent dovish signals regarding the possibility of another US rate hike in March, we revise down our Mexico overnight rate forecast for this week's meeting and expect the Bank of Mexico to wait and watch before making its next move in March. Further, given the developing external scenario that may have prompted the Fed to issue a dovish statement, we no longer see two rate hikes in Q2." Says Societe Generale