Mexico | The FED will begin to withdraw monetary stimulus; Mexico in good position

Summary

The COVID pandemic resulted in an unprecedented collapse in both aggregate supply and demand for most of the world's economies.

Key points

• Key points:
• Even the most liquid market in the world, the US government bond market, experienced periods of illiquidity.
• To face this serious situation, the United States Federal Reserve (the Fed) carried out the most powerful monetary expansion in its history.
• As stated in yesterday's press conference, everything indicates that they will soon begin to increase the monetary policy rate and that soon they will begin to gradually reduce the size of their balance sheet.
• At BBVA Research we estimate that the Fed will raise interest rates four times this year (starting in March), by 25 basis points each time, and will repeat the same dose in 2023.

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