Financial Economics & Central Banking
Financial Economics & Central Banking latest publications
We prefer to support the argument that a neutral, prudent but accommodative monetary policy will be the main monetary policy stance in 2021, while the authorities will postpone the beginning of a real tightening cycle and “proactive deleveraging” to a later stage.
Public debt levels have skyrocketed globally due to the increase in fiscal expenditure needed for public measures to fight the economic damage caused by the pandemic, and by the effects of the slump in economic activity.
Discussions about climate change policies are gaining ground in public debate as social awareness improves, and this is increasingly reflected in specific proposals for defining economic policy.
Agencies' sovereign ratings and sovereign spreads in the CDS markets have remained relatively stable over the past year despite the current pandemic crisis and the large fiscal and economic activity deterioration, mainly due to the unprecedented support from fiscal and monetary policies
The decision might not mark the end of the rate cut cycle if with falling inflation Banxico resumes it in 2021. Banxico reasons for pausing not clear in the statement.
We continue to think that Banxico will move in 25bp steps from here until the policy rate reaches 3.0% (in May 2021). We continue to expect that Banxico will slash rates further than currently expected, as Banxico keeps them close to 0% in real terms.
Regarding the National Financial Education Week, we recover the main advances, setbacks and changes that Mexico has had in financial inclusion and education. We present the most notable aspects of the National Policy for Financial Inclusion 2020, along with the latest figures of the country in financial inclusion.
The statement signalled that the Fed remains a pillar of unity and stability in uncertain times, while the assessment of economic conditions confirmed ongoing improvements albeit at a significantly reduced pace.