Mexico | Banxico will remain hawkish and backward looking

Summary

Banxico should start a rate cut cycle in 4Q to avoid a further tightening of the monetary policy stance. Some hints about the roadmap for the rate cut cycle will be useful, but seem unlikely in the short term.

Key points

• Key points:
• Banxico’s June meeting minutes showed members’ agreement on the need for “caution” in the current disinflationary stage.
• Banxico will keep its policy rate steady for at least this upcoming meeting and the following in September.
• Sooner rather than later, Banxico is likely to join other countries such as Chile and Brazil which are already easing their restrictive stance.

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