Published on Thursday, November 9, 2023

Mexico | Banxico turns less hawkish

After signaling in September that the policy rate was set to remain unchanged “for an extended period,” Banxico now says that it must be kept unchanged “for some time.”

Key points

  • Key points:
  • Banxico kept the policy rate unchanged at 11.25% for the fifth consecutive meeting and revised down its short-term headline inflation forecasts.
  • The path for core inflation was left unchanged as, in line with our view, Banxico continues to think that core inflation will keep steadily easing.
  • There was a significant shift of tone in the statement that suggests that discussions to avoid a more restrictive stance in the coming months have started.
  • The renewed forward guidance suggests that members thought it was appropriate to convey now that a start of a rate cut cycle in 1Q24 was becoming increasingly likely.
  • We continue to expect rate cuts to start in early 2024 and no longer think that we need to further push back the timing of the start of the rate cut cycle.

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