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Analyst Views Following Bi-Weekly CPI Data

MEXICO
  • *Itaú have noted that while core inflation continues easing, its breakdown is not showing a generalized downward trend, with core services inflation remaining practically unchanged. Further increases in gas prices, on the non-core index, could also slow the disinflationary process.
    • Their 2023 year-end inflation forecast stands at 4.5%. In this context, Itaú’s base scenario is for Banxico to start cutting its policy rate in November with a 25-bp rate cut, but with a bias to delay the start of the easing cycle.
  • *Banorte are less optimistic that the core will reach the Banxico’s estimate of 5.1% by 4Q23 (Banorte: 5.4%). In their view, this is very important as the market is still discounting with a high probability a 25bps rate cut in December. If their forecasts materialize, Banorte think this is not probable if the central bank keeps adjusting upwards its view about this inflation component, which remains as the Board’s main concern.
    • While Banorte noted they would be monitoring Banxico’s minutes closely, especially the assessment about the outlook for the economy and prices and how these could affect the monetary policy path, they have reiterated their long-held call that Banxico will not start easing until February 2024.
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