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December 20, 2024
However, we think that the best timing to cut the policy rate by 50 bps was today, since the window will likely close early next year if Trump imposes tariffs and a context of global risk aversion hits the peso, turning Banxico even more cautious.
December 17, 2024
Although we think there is a 40% chance of a 50bp cut, the Board will most likely end sticking to another 25bp cut. A 50bp rate cut would be a sound policy decision considering the excessively restrictive real ex-ante rate and the progress of disinflation.
November 15, 2024
A majority will remain determined to continue the easing cycle over the coming months, but we now expect Banxico to lower the policy rate to 8.00% by the end of next year (up from our previous 7.50% forecast).
November 12, 2024
Banxico is likely set to cut the policy rate by 25 bps this week in a backdrop of easing core services inflation, which is starting to turn a corner amid a challenging context for economic activity.
September 27, 2024
In a backdrop of an “improving” inflation outlook and worsening growth prospects, a majority of members seem to think the central bank has ample wiggle room to cut rates. The forward guidance now strongly suggests that Banxico is set to embark in a streak of consecutive rate cuts ahead.
September 24, 2024
In view of the lags of monetary policy, we think that Banxico is already late in adjusting the excessively high real ex-ante rate, and thus, the monetary policy stance is set to continue to weigh on the economy in the coming quarters.
August 9, 2024
Banxico looked past the jump in headline inflation, rightly so in our view, with core inflation easing and cut the policy rate by 25bp to 10.75%, as we anticipated. It anticipates that lower inflation pressures may allow further rate cuts going forward.
August 6, 2024
Our base case is a split 3-2 vote in favor of a 25bp rate cut to 10.75% with a majority of members acknowledging a weakening economy and increased confidence about the inflation outlook, but the sudden peso depreciation following the weekend’s global volatility bout represents a risk to our call.
June 28, 2024
Board members voted 4-1 to hold rates steady at 11.00%. The fact that the decision wasn’t unanimous came as a bit of surprise considering the recent peso weakening and that Banxico was set to revise up its short-term headline inflation forecasts.
June 27, 2024
Banxico will most likely suggest it will proceed with caution, at least until more information is available about the judicial reform and the type of fiscal adjustment that will be implemented next year to fulfill the federal government’s commitment to reduce the public deficit by 2.9 points of GDP next year.
May 10, 2024
While members continued to state that “the disinflation process is expected to continue,” the stickiness of core services inflation drove Banxico to revise up its inflation forecasts after considering that “inflationary shocks are foreseen to take longer to dissipate.”
May 8, 2024
The favorable core inflation trend gives Banxico room to continue lowering the policy rate, which will remain tight during 2024-25 despite a gradual rate cut cycle, but we now expect Banxico to pause the rate cut cycle this week and take rates down to 9.75% by year end.
