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The futures market is almost fully pricing in that the Fed will cut rates by 50 bps this year (95% implied chances) and continue to anticipate roughly 100 bps worth of rate cuts next year. Markets are certain of a rate cut in September, but are also likely pricing in risks in the event of a Trump’s second term.
As expected, the ECB leaves its monetary policy unchanged and leaves the door open for a rate cut at the next meeting in September, awaiting for more data on wages, profit margins and productivity that confirm its inflation outlook.
National inflation in June was 4.6% MoM (271.5% YoY) and accelerated with respect to the previous month (4.2% MoM) for the first time in the Milei administration but due to the disparate behaviour of regulated prices in both months. Even so, th…
Political events at the centre scene, in a year marked by key elections in many regions with two warlike conflicts with tragic consequences still underway, contrasts with the resilience of the global economy, which continues its very soft landi…
The economic activity shows signs of cooling, while the normalization in demand continues to be gradual. The inflation trend continues easing in the presence of historically much tighter monetary stance. Still, high inflation expectations and s…
Consumer prices rose by 1.64% m/m in June, well below our expectation (2.24%), which led to an annual inflation of 71.60%. We expect the monthly consumer inflation trend to continue to weaken, driving the annual inflation down to 45-50% range by September and to 43% by the end of 2024.
June inflation was 0.12% MoM. The result for the month is explained by the increase in the prices of foods such as fish and potatoes, moderated by the decrease in the prices of chicken, some fruits, and fuel. The year-on-year rate was 2.3% (2.0% in May) within the Central Bank's target range.
Banrep's Board maintained the pace of rate cuts of the last meetings, with a 50bp reduction in June, accumulating a total of 200bp since it began its downward rate cycle in December 2023. The decision was split, with 4 members in favor of the 5…
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…
Mid- and long-term Treasury yields eased further from their late-April’s highs on a less hawkish than expected Fed in this month’s meeting, and fresh signs that the inflation jump in 1Q will prove transitory.
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.
The recent increase in inflation, not seen in decades, has shown our aversion to the constant escalation of prices. Although inflation has already fallen, it is expected to stay above 3%, and around 2.5% in 2025, affected by the performance of the cost of services.
