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.”
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Although we continue to expect the beginning of a rate cut cycle in 1Q24, Banxico’s cautiousness and hawkishness are significantly tilting the risks towards a further delay in the start of this cycle.
The central bank closed the door for the start of an easing cycle in the short term, as it continued to convey its intention to keep the policy rate unchanged “at its current level for an extended period.”
Banxico will likely remain backward-looking in the short term and keep its policy rate steady for at least this month’s meeting and the following two in 4Q23.
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.”
Banxico should start a rate cut cycle in 4Q to avoid a further tightening of the monetary policy stance. Some hints about the roadmap for the rate cut cycle will be useful, but seem unlikely in the short term.
March 30, 2023
Mexico | Banxico slows the pace of hikes and hints at possible end of the hiking cycle
Banxico raised the policy rate by 25 bp to 11.25%, acknowledged that inflation was slowing, revised down its short-term headline inflation forecasts, took a less hawkish tone and left the door wide open for a pause at the next meeting in May
Banxico will stick to its resolve to bring inflation down with a 25bp hike but might hint future decisions are more uncertain
This Agenda presents the 2023 dissemination schedule for economic indicators and relevant monetary policy events in Mexico and the US; dates of important events such as the meetings of various relevant international entities such as: World Econ…
Banxico lifted the policy rate by 50bp, to 10.50% and strongly hinted that the end of the tightening cycle is in sight .
Banxico continued following in the footsteps of the Fed and lifted the policy rate by 75bp, to 10.00%, as widely expected. Banxico will likely still match December’s Fed hike but a decouple in February seems now possible.
November 9, 2022
Banxico 75bp hike a done deal; all eyes on hints of a near end of the tightening cycle
Banxico will continue following in the footsteps of the Fed and will lift the policy rate by 75bp, to 10.00%. The main question going forward is whether Banxico will stick to its strategy of matching every additional Fed hike or will start to discuss decoupling as soon as in December