Banxico resumes its easing cycle with a 25 bp rate cut, to 4.00%

Summary

A dovish Banxico leaves the door open for additional cuts even after acknowledging that headline inflation is set to temporarily rise in the near-term.

Key points

• Key points:
• Banxico resumes the easing cycle even after acknowledging that headline inflation is set to rise
• The Board seems to be less concerned about this expected jump in inflation
• If that implies a more forward-looking Board, it will constitute a very welcome development
• Given this, along with a dovish mood and an economy that is set to weaken further by the time of the next meeting, we think that the odds of a rate cut next meeting have increased

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