BANXICO Minutes 1500 GMT/ 1000 ET

Minutes of the December meeting will indicate which committee member joined Heath in voting for a 25bps cut. More than likely this will be Deputy Governor Esquivel given his dovish stance since his term started in January 2019. The minutes should provide more details on their motivation.

Growth projections were revised upwards which may lead to fewer downbeat comments over the recovery, however, the increasing uncertainty, both home and abroad, relating to the pandemic should keep a bearish tilt to the discussion.

Interestingly, the December statement was very open in criticising unpredictable domestic policies when referencing the modification of the Banxico Bill. The topic ignited tensions between the Government and the Central Bank, causing volatility in domestic markets. A detailed discussion on this topic would be expected and analysts have highlighted this could be the main subject in favour for a longer pause in monetary stimulus to monitor developments.

Of note, GS and JPM are calling for a 25 bps cut to 4% in February, with the latter citing the large output gap, significant slack in the labor market, deepening credit crunch, weak sentiment indicators, weak fiscal stimulus, and low non-tradable inflation as justification for more easing.