September 8, 2020
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.
The economic package reinforces the signal of fiscal discipline by establishing a primary balance of 0% of GDP. It is positive that the federal government has proposed that goal instead of the deficit of 0.6% of GDP that it had suggested in Pre-Criteria for 2021.
A notably dovish tone alongside a widening negative output gap backdrop points to further cuts in line with our view. • Banxico strikes again a remarkably and warranted dovish tone.
We are sticking with 50bp cuts in the policy rate in each of the 2020 remaining scheduled meetings (to 3.00%). Forward guidance is unlikely but we expect Banxico to remain dovish and to brush aside the recent temporary and supply-driven inflation increase.