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February 13, 2025
Spanish banks are rapidly translating the reduction in official interest rates to new lending operations' interest rates, which benefits borrowers. In the case of deposits, the transmission is slightly slower than in the hiking cycle, which benefits depositors.
February 6, 2025
It unequivocally signaled that it remains set to keep cutting rates steadily ahead and hinted that in the absence of any major events, it is likely to consider additional 50bp cuts at upcoming meetings.
February 5, 2025
Below 4.0% inflation, easing core services inflation, softer aggregate demand, a cooling labor market, a peso that continues to hold up, and an overly restrictive monetary policy stance, keep the door wide open for a larger 50bp cut.
February 3, 2025
The consumer price index contracted 0.09% m/m in January. The result for the month is mainly explained by the seasonal normalization after the end of the year holidays (price of poultry products and transportation rates). The interannual inflation rate was 1.9% in January.
January 30, 2025
Signs that core inflation is back on trend to 2% could open the door for another cut in March, but the implementation of policies that could spark an upward trend in inflation, even if temporary, could imply a more extended pause.
January 27, 2025
The risk has grown that the Fed could keep rates on hold for more than one meeting as the nature and purpose of the upcoming tariffs is still unknown (i.e., their magnitude, their temporary or permanent nature, used mostly as a negotiating tool?).
January 23, 2025
Further easing of at most 50 bps by year-end is still on the table, but the Fed will likely stay on the sidelines while the uncertainty around renewed immigration policies lingers and until it knows if Trump follows through on his plans to impose tariffs.
December 27, 2024
All but one FOMC member voted last week to continue removing monetary policy restriction through a 25bp cut, but the Fed also signaled a slower pace of further adjustments due to the incipient but increased uncertainty about inflation next year.
December 20, 2024
The Board of Banrep reduced its monetary policy rate by 25 bps, bringing it to 9.50%. This decision was split: 5 members in favor of the 25 bp reduction, one in favor of a 50 bp reduction and one in favor of a 75 bp reduction. This is an important change in the Board's stance, after 6 meetings with rate cuts of 50bp.
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 19, 2024
With “the story of why inflation should be coming down [...] still intact,” the main reason behind today’s hawkish shift is likely the growing concern around the potential inflationary impact of Trump’s proposed trade, fiscal, and immigration policies.
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.
