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Banxico Minutes - Analyst Comments (2/2)

MEXICO
  • *Goldman Sachs: The minutes are slightly dovish (or less hawkish). There is only one director explicitly arguing that at the next meeting the MPC should consider whether to hike by another 75bp. Three other directors were somewhat agnostic on the magnitude of the hike in September, though in our assessment flexible and implicitly leaning to consider a milder rate hike. Finally, there is one director with clearly dovish views, who warns that there are signs that Mexico is “close to reach an unnecessarily tight monetary stance” and sees the possibility of decoupling from the pace of the FOMC relatively soon. In our assessment, this director seems inclined to vote for at most a 50bp hike in Sept and possibly a milder hike than the FOMC.
  • *JPMorgan: Banxico still has room to continue hiking, and the risk is clearly for a more extended cycle beyond 4Q22, but JPM believe decoupling (in magnitude) with the Fed is to be expected soon; but if this occurs, it should not be confounded with a move away from a hawkish stance. JPM think most decisions will be split in terms of the suggested magnitude of hikes. They currently see rates at 9.75% by year-end. Next week’s QIR should be important to better understand the bias of the board.
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