Published on Friday, August 11, 2023

Mexico | Banxico remains in a hawkish mood

The Governance Board did not send any signal about a possible start of a rate cut cycle in coming meetings and continued to signal its intention to keep the policy rate unchanged “at its current level for an extended period.”

Key points

  • Key points:
  • As widely expected, in an unanimous decision, Banxico kept the policy rate steady at 11.25% for the third meeting in a row.
  • Hints about the roadmap for a rate cut cycle ahead would have been particularly useful but they were unlikely as Banxico was set to remain cautious and backward-looking.
  • We continue to think that Banxico should start a rate cut cycle in 4Q, now probably in December, to avoid a further tightening of the monetary policy stance.
  • Yet, risks of a probable further delay of the rate cut cycle to 1Q24 increased somewhat after today’s statement.

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