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Barclays and Goldman Sachs On Banxico Policy Following QIR

MEXICO
  • Barclays: The discussions in the February 9 meeting minutes released last week, as well as the Quarterly Report, are in line with Barclays view that Banxico will hike 25bp on March 30, and another 25bp on May 18, and then will leave the rate unchanged for the rest of the year.
    • While there has been no talk among board members about potential rate cuts yet, Barclays continue to anticipate Banxico will be able to cut rates in 2024 towards a rate of 7.50%.
  • Goldman Sachs: The MPC is likely to hike again at the March meeting: +25bp to 11.25% and possibly the final iteration of the long cycle that began in Jun-21 with the policy rate at 4.0%.
    • A terminal nominal policy rate at around 11.25% would be consistent with a real ex-ante policy rate of around 6.00% (260bp above the 3.4% upper-limit of the central bank real neutral range at end-2022).
    • A more hawkish and restrictive monetary stance is justified by the still challenging current and prospective inflation outlook (core and services in particular), further deterioration of headline and core inflation expectations, solid labor market backdrop, and the expectation of two additional 25bp FOMC Fed funds hikes.
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