Javier Amador is Principal Economist of BBVA Research. He joined BBVA Research in 2002. He has worked mainly in macroeconomic and financial analysis related to the Mexican, US and global economy. Between 2005 and 2007 he was a Senior Economist in the US team where he analyzed inflation and monetary policy mainly. He was a Principal Economist in the Global Financial Scenarios Team from 2010 to 2013 where he followed mainly Monetary Policy.
He obtained the Degree in Economics at the Monterrey Institute of Technology (ITESM) in 2000 with the highest honors (Summa Cum Laude), and an MsC in macroeconomics and finance subjects at the University of Birmingham in 2001.
Banxico’s Board kept its policy rate unchanged at 4.0%; the wording signals a shift from a dovish to a cautious tone. All five Board members voted to keep the policy rate on hold.
We are changing our call for tomorrow’s MPC decision to pause following today’s unexpected strong core inflation print. Core inflation rose strongly, to 4.1%, in the first half of March.
March 23, 2021
Should Banxico hold the policy rate steady, reacting to a temporary rise in inflation?
We stick with our call of a 25bp rate cut to 3.75%, but the odds became closer, 60-40 leaning to a cut in our view. The MPC should not react to temporary increases of inflation, already acknowledged in its communication and expected by everyone (ie, markets and analysts).