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Analyst Views On Banxico Minutes

MEXICO
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  • HSBC note that that the minutes for the 9 May meeting confirmed that the decision to keep rates on hold at 11.0% was accompanied by a cautious and data-dependant tone. This allowed Banxico to lift its inflation forecasts, which will help to avoid big deviations ahead, and support rate cuts when convergence proves clearer. HSBC think three members of the Board would consider a 25bp rate cut in June, if data and conditions allow it. Their base case is for a 3-2 vote for a June cut, dependent on the next two inflation prints.
  • For JP Morgan, the key message from the board was the need to remain cautious and vigilant given the balance of risks to inflation (to the upside) but it also underscored the importance of carefully pondering incoming data to take one decision at a time. JPM still expect a 25bp June cut, mostly on the grounds of a very restrictive monetary policy stance. But this requires further good news on inflation in 2H May and 1H June. All eyes on Banxico’s QIR report next week.
  • In Goldman Sachs' view, the minutes had a slightly hawkish undertone, with most directors still concerned with services inflation dynamics. June will likely be a live meeting for a cut, but far from guaranteed. Any cut then will likely be split 3-2. Overall, given the underlying board dynamics expressed in the minutes, the probability of a June move is lower than what GS assessed earlier.
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  • HSBC note that that the minutes for the 9 May meeting confirmed that the decision to keep rates on hold at 11.0% was accompanied by a cautious and data-dependant tone. This allowed Banxico to lift its inflation forecasts, which will help to avoid big deviations ahead, and support rate cuts when convergence proves clearer. HSBC think three members of the Board would consider a 25bp rate cut in June, if data and conditions allow it. Their base case is for a 3-2 vote for a June cut, dependent on the next two inflation prints.
  • For JP Morgan, the key message from the board was the need to remain cautious and vigilant given the balance of risks to inflation (to the upside) but it also underscored the importance of carefully pondering incoming data to take one decision at a time. JPM still expect a 25bp June cut, mostly on the grounds of a very restrictive monetary policy stance. But this requires further good news on inflation in 2H May and 1H June. All eyes on Banxico’s QIR report next week.
  • In Goldman Sachs' view, the minutes had a slightly hawkish undertone, with most directors still concerned with services inflation dynamics. June will likely be a live meeting for a cut, but far from guaranteed. Any cut then will likely be split 3-2. Overall, given the underlying board dynamics expressed in the minutes, the probability of a June move is lower than what GS assessed earlier.