Financial Markets

The 2027 economic package projects a gradual fiscal consolidation with a wide deficit of -3.9% of GDP. Despite fiscal prudence, challenges remain due to low tax collection and spending rigidity. Seeking revenue growth without a comprehensive reform limits fiscal space for more public investment.

The report analyzes the undervaluation issue of the RMB. Based on the MB and BEER models, it concludes that while there indeed exists periods of undervaluation, its degree of undervaluation is significantly lower than often claimed.

In 2026, the dollar reversed its initial weakness, strengthening on expectations of a more hawkish Fed, tensions in the Middle East, and capital flows into the U.S. driven by the AI boom.

In June 2026, bank deposits and lending in Mexico showed greater momentum, driven by time deposits and consumer credit. Growth in outstanding credit recorded its highest rate of the year (3.0% in real annual terms), while deposit growth accelerated to 3.1% in real annual terms.

The article analyzes the shift in the US Federal Reserve's communication strategy under Kevin Warsh. Forward guidance is abandoned for a descriptive approach amid high economic uncertainty, highlighting the importance of clear communication to anchor market expectations.

By reiterating that “it will be appropriate to maintain the reference rate at its current level” and that the current stance is “well-suited” to the macroeconomic environment, the Board signaled that it is comfortable with the policy rate at its current level.

Today’s 9-3 voting split at the Fed suggests that support for monetary policy tightening has continued to grow within the Committee. The next policy decision will largely depend on whether upcoming inflation data validate the recent improvement in inflation.