Publications

We expect Banxico to keep the policy rate unchanged at 6.50% this week. 3Q GDP and core inflation data for the first half of October challenged September’s dovish minutes, and weakened the case for further easing.

Inflation in Peru accelerated in October to 5.3% year-on-year, exceeding the target range for the eighth consecutive month. The rise was mainly due to supply shocks in food and transport. Core inflation, which excludes food and energy, also rose, reaching 4.6%.

The ECB kept rates unchanged but signalled that another hike in December is increasingly likely. Lagarde played down tensions in French bond markets, while her early departure also drew attention. Beyond December, the outlook will largely depend on how the energy shock evolves.

The FOMC voted in a split decision (10-2) to keep the fed funds target range unchanged at 3.75–4.00%. We still expect a 25bp hike in December, when incoming data and updated SEP projections will test our baseline of unchanged rates through 2027.

The CBRT cut the policy rate by 100bp to 36% and accordingly lowered the asymmetric interest corridor to 34.5-39%, in line with the market consensus. The CBRT also signals that the easing cycle may not proceed smoothly, with potential pauses along the way.

The ECB's rate hikes are increasing financing costs in Spain, raising mortgage and other loan rates. However, the economy shows greater resilience than in the past due to lower private sector debt and larger weight of fixed interest rate loans.

Keynote Lecture at the Swiss National Bank for the CEPR European Household Finance Annual Conference. This analysis, based on high-frequency data from Spain, challenges the idea that monetary policy has long lags. It shows that consumption and sales react within days or weeks to monetary shocks.