Mexico inflation expectations for 2016 unlikely to change

Mexico's inflation remains at historical lows and a slower growth path implies more time for demand side pressures to arise. Therefore, Banxico will be reluctant to hike in September (considering that the probability of a Fed hike is also lower), said Barclays in a research note on Friday. 

Moreover, FX volatility persists, though it has not contaminated the rates markets and Banxico would prefer to increase FX intervention than to increase rates for FX stabilization. 

"Finally, there should be some pass-through to CPI in H2 15, though we believe there is room to accommodate this and therefore inflation expectations for 2016 may not be affected", argue Barclays.