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Consumer prices rose by 3.28% m/m in Nov, lower than both our expectation (4.0%) and cons. (3.7%), while annual inflation accelerated to 61.98% (vs. 61.36% prev.). Considering the recent lower than expected realizations coupled with the positively surprising rate hikes, the year-end consumer inflation might be around 65%.

We will learn this month about the last monetary policy decisions of the year in Mexico and the United States. The announcements from the central banks will be crucial for analysts, market participants, and the general public to obtain a clearer understanding of the direction monetary policy will take in 2024.

Following a less hawkish tone from Chair Powell in his press conference early this month, the yield curve now suggests a potential turning point has been reached, reflecting investors’ belief that the Fed is done raising rates and growing expec…

In 2023, interest rates on debt have reached levels not seen since the financial crisis in the U.S. and the 2011 debt crisis in the eurozone. During the first part of 2023—similar to what occurred in 2022—short-term interest rates led the hikes.

In its November decision, the Central Bank Board decided to reduce the reference rate to 7.00% but noted that this does not imply a cycle of successive interest rate cuts. The monetary policy position, understood as the real ex-ante reference r…

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.”

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.

Consumer prices rose by 3.43% m/m in October, lower than both our expectation (4.5%), resulting in an annual inflation of 61.36%. We expect consumer inflation to be realized closer to the upper bound of the Central Bank’s revised inflation proj…

For now, the FOMC will continue with a “meeting-by-meeting” strategy until they are confident that they have achieved a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time.

BanRep kept its rate unchanged with a split vote. They argue that inflation, still high, activity around trend, and positive labor market figures, allow to keep the policy in its current stance. We believe that the first rate cut will be in Dec…

We expect the FOMC to hold the fed funds rate steady at its 5.25-5.50% target range, but also to keep its doors open for an additional rate hike in December, as signaled by the 5.6% median peak rate projection revealed in the September SEP.

Since mid-July, the euro has depreciated by more than 5% against the dollar, even dropping to USD 1.04 at the beginning of the month. This drop is the result of a combination of circumstances that have had a significant impact on the currency in the second half of 2023 after a solid second quarter.