Banxico Minutes: Esquivel and Heath Dissenters

*BANXICO'S ESQUIVEL, HEATH VOTED FOR 25 BPS CUT AT LAST MEETING (bbg)

Esquivel's reasons for cut vote:

*The amount of slack in the economy, the appreciation of the Peso, the decline in country-risk perception, forecasts on energy prices, and no inflationary pressures are foreseen in the short term.

*Additionally economic reactivation is expected to take place at a relatively slow pace, and that both consumption and domestic investment remain weak.

• Interesting mention of the currency

Heath reiterates previous views that they face a fragile, difficult and prolonged recovery after a sharp fall in economic activity and its resultant negative impact on the labour market.

*Following the minutes, all focus now turns to the new Deputy Governor, Galia Borja, a former Treasurer at the MoF, who will vote for the first time in February. Any comments between now and the next meeting (Feb 11) will be very closely monitored given the split decisions seen in the previous two meetings.

Some have speculated that given her Ministry of Finance background, she may bring a slightly more cautious/dovish approach to the role. The firm expectation, however, is that the composition will likely provide a relative dovish shift given she is replacing the more hawkish Guzman. The hawkish stance will be adopted by Irene Espinosa.