Published on Friday, December 1, 2023

Mexico | Recap and outlook for monetary policy decisions

We will learn this month about the last monetary policy decisions of the year in Mexico and the United States. The announcements from the central banks will be crucial for analysts, market participants, and the general public to obtain a clearer understanding of the direction monetary policy will take in 2024.

Key points

  • Key points:
  • In March 2022, the Fed embarked on the most aggressive rate-hiking cycle in decades after having cut rates to nearly zero in response to the uncertain effects of the pandemic.
  • Banxico adopted a similar strategy through an aggressive cycle of rate hikes that began in June 2021, bringing its target rate to 10.50% by the end of 2022.
  • Throughout 2023, the decisions of both the Fed and Banxico were aimed at continuing to consolidate a restrictive monetary stance, albeit at a more moderate and cautious pace.
  • Banxico raised its target rate two more times, reaching a peak of 11.25%, while the Fed did so four times, bringing its policy rate to 5.50%.
  • It is likely that both central banks will decide to keep their rates unchanged this month and provide more signals about the start of a rate-cutting cycle next year.

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