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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.
GDP grew 5.0% y/y in May. The expansion of the fishing sector and primary manufacturing stood out (together they reflect the effect of the greater catch of anchovy). We estimate that the direct contribution of this factor to GDP growth is 2.5 percentage points, which represents half of the expansion rate for the month.
Higher interest rates have had no significant effect on risk assets. Ample liquidity, the soft landing of the economy and contained corporate and household balance sheets are behind this trend.
In its July decision, the Board of the Central Bank decided maintain the reference rate at 5.75%. The monetary policy stance, understood as the real ex-ante reference rate, remains in restrictive territory.
Credit to the SPNF maintained double-digit nominal growth rates in May (11.4%) driven by the dynamism of the consumer portfolio, particularly in the automotive segment, and a rebound in business credit. This rebound stemmed from credit to the …
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.
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 forecasts.
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 commi…
In April 2024, the balance of traditional bank deposits (sight + term) registered a real YoY growth rate of 3.6%, while the balance of the current credit portfolio granted by commercial banks to the non-financial private sector (NFPS) recorded …
After 6 months in office, the government has made significant progress in improving the fiscal balance, which in turn resulted in a reduction of monetary issuance and a deceleration of inflation. The challenge now is to consolidate the fiscal surplus and dismantle FX-market restrictions to foster sustainable growth.
Output will grow 2,9% this year (previous forecast: 2,7%), supported by a new pension funds withdrawal. Sectors affected by weather anomalies in 2023 will recover and non-primary sectors too thanks to increased private spending. In 2025, once the impact of pension funds withdrawals is exhausted, growth would reach 2,7%.
