MPR (Monetary Policy Rate)

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The transmission lag of monetary policy to the price level is five and two quarters for the US and Mexican economies, respectively. A surprise of 50 basis points in the reference rate would reduce the price level by 0.54% and 0.14% in the US and Mexico, respectively.

The Central Bank of Turkey (CBRT) kept the policy rate (one-week repo) at 19% in line with the expectations. Given the worsened inflation outlook, the CBRT tries to manage by eliminating any early rate cut expectations thus, we expect an easing cycle only very gradually in late 3Q and end the year with 16% policy rate.

The Central Bank of Turkey raised the policy rate by 200bps to 10.25%. The CBRT justifies decision with the inflationary pressures coming from a strong path of the economic recovery (in line with our view) and supply-side effects due to the rec…

Yet, we continue to expect Banxico to cut the policy rate until it reaches c. 0% real levels by year-end ie, 3.0% to 3.5%. The Board’s concerns on the ER should have eased in the intermeeting period.

Banxico should speed up its slow pace of easing and implement additional liquidity measures. There is scope for both further cuts in the policy rate and implementing additional liquidity support measures.

Central Bank sees almost no room for further monetary stimulus. The risks on the downside are accentuated for inflation 2018.

En línea con las expectativas, Banco Central mantiene la TPM y sesgo moderadamente expansivo

El plazo para introducir mayor estímulo monetario comienza a agotarse.

Consejo sigue esperando la concreción de los riesgos de corto plazo para la inflación, los cuales creemos ya se han materializado.

The central bank kept the policy rate on hold at 3% and maintained the neutral bias, as widely expected. The communiqué highlighted the Board’s assessment of still weak economic activity, while annual inflation figures will remain above 4%…

The decision of the CB of Colombia was taken in a context of economic slowdown to potential levels while inflation is at the CB’s long-term goal. The credit market in Brazil continues its downward trend despite recent liquidity injections. The higher than expected commercial deficit in Mexico was driven by a growth in impor…

Results also revealed estimates of another 25bp cut (to 3.25%) at September’s meeting and a MPR of at least 3% on a three-month horizon (BBVAe: 2.75% at 2014 eop)