2024-07-04 03:14:45
With a board divided between economists of the Bank of Mexico (4 to 1) the reference rate was kept unchanged to continue at 11%, only Omar Mejia voted in favor of a cut in 25 basis points.
Alejandro Saldaña, chief economist at Banco Bx+, highlighted that the novelty in this decision was the future guidance of the members of Banxico which “foresees that the inflationary environment will allow for discussion of adjustments to the reference rate,” which opens the door to a next cut.
The analyst explained that inflation has not fallen again and its outlook is more uncertain, together with the recent financial volatility and a Fed More patients are closing the room for maneuver Banxico.
“We therefore raised our forecast for the target interest rate at the end of the year… therefore, we raised the forecast for the target interest rate, leaving the 2024 closing between 10.50 and 11%.
Meanwhile, a review of Arely Medina of Citibanamexrecorded that the decision to pause the rate without changes is due to the post-election depreciation Of weight.
“We estimate that Banxico make continued cuts of 25 basis points starting in August to reach a level of 10% in 2024.”
Citi stressed that the announcement was in line with market expectations and underlined that there was no unanimous message, in the case of Omar Mejia voted to cut the rate by 25 points.
Medina indicated that as a consequence of the reconfiguration of the political panorama due to the triumph of Morena and the possible decrease of counterweights, there is a strong depreciation of the currency, so we anticipate that the inflationary convergence could occur until the fourth quarter of 2025.
Jesus Lopez, financial analyst at Base Bank, He noted that the upward revision of the inflation forecast was moderate, because, although they recognize that volatility was observed in the financial markets and a visible depreciation of the peso, its upward influence on the inflation forecast is counterbalanced by the weakness of economic activity that extended to second trimester.
He said that in the statement Banxico highlights that the balance of risks for economic activity has been skewed downwards.
Following the announcement, the exchange rate is trading around 18.40 pesos per dollar, showing a daily depreciation of 0.39%, The monetary policy statement sends a signal that the inflationary risk from the depreciation of the peso is offset by the economic slowdown, which leaves the door open to rate cuts, he said.
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2024-07-04 03:14:45