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Remittances have been volatile over the past five months. Increases have been reported in two of them (April and June, even months) and declines in three months (March, May and July, odd months). In August, the peso depreciated 5.4%, so the next remittance report is expected to show growth.
Our base case is a split 3-2 vote in favor of a 25bp rate cut to 10.75% with a majority of members acknowledging a weakening economy and increased confidence about the inflation outlook, but the sudden peso depreciation following the weekend’s global volatility bout represents a risk to our call.
The depreciation of the Mexican peso (MXN) against the dollar (USD) of 7.6% in June may partly explain this observed increase in remittances. Mexicans abroad take advantage of this temporary rise to send more dollars, which translates into more…
In the last 5 years, the effect of “Mother's Day” drove the arrival of 6.5% more remittances in the month of May, compared to the trend marked by the adjacent months of April and June. In 2024, this translates into an amount close to 364 millio…
Board members voted 4-1 to hold rates steady at 11.00%. The fact that the decision wasn’t unanimous came as a bit of surprise considering the recent peso weakening and that Banxico was set to revise up its short-term headline inflation forecast…
Banxico will most likely suggest it will proceed with caution, at least until more information is available about the judicial reform and the type of fiscal adjustment that will be implemented next year to fulfill the federal government’s commitment to reduce the public deficit by 2.9 points of GDP next year.
After the start of the pandemic in the US, the Latino employed population had a more dynamic recovery, and by November 2021, 19 months after its lowest point, it had already been able to recover to its pre-pandemic levels. In contrast, the non-Latino population recovered until January 2023, 33 months later.
While members continued to state that “the disinflation process is expected to continue,” the stickiness of core services inflation drove Banxico to revise up its inflation forecasts after considering that “inflationary shocks are foreseen to t…
The favorable core inflation trend gives Banxico room to continue lowering the policy rate, which will remain tight during 2024-25 despite a gradual rate cut cycle, but we now expect Banxico to pause the rate cut cycle this week and take rates …
Remittances to Mexico fell 3.3% in March. Thus, they culminate a streak of 46 consecutive months with growth, which lasted between May 2020 and February 2024. During this period, remittances increased in annualized terms from 38.8 billion to 63…
In November 2023, remittances to Mexico had an increase of 1.2%, for the month of December it was 2.2%, during the first month of 2024 they increased by 3.1%, and the last data, which corresponds to the month of February, was of 3.7%. Thus, in the last 4 months they have averaged increases of 2.6% at an annual rate.
This first rate cut marks the start of a long and gradual easing cycle that will most likely keep the monetary policy stance restrictive throughout this year and next even if Banxico cuts the policy rate without skipping any meeting in the remainder of the year and in 2025.
