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Published on Wednesday, December 18, 2019

Banxico’s rate cut cycle has legs

A faster easing pace is warranted but Banxico is likely to remain overly cautious. No signs that Banxico is willing to speed up the long overdue easing cycle.

Key points

  • Key points:
  • All members will vote for a rate cut, we expect a split vote again but a majority of three will vote again for only a 25bp rate cut
  • A 50bp would be more appropriate but Banxico is unlikely to speed up the easing pace
  • We expect the policy rate to reach 6.0% by August 2020; a faster easing pace and a looser monetary policy stance are warranted but we expect Banxico to remain cautious

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