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Citi Raise Year-End Banxico Interest Rate Forecast To 10.25%, From 9.25%

MEXICO
  • Citi have raised their year-end Banxico interest rate forecast to 10.25% this year, from 9.25%, amidst currency volatility which they believe will keep inflation persistent and make the central bank more cautious in the short term. They now believe that Banxico will only cut when the Fed does this year.
  • At the same time, Citi have reduced their 2024 GDP growth forecast to 1.8%, from 2.1%, and their 2025 estimate to 1.2%, from 1.5%. The move follows the increase in the risk premium post election, given expectations that the new government will prioritise institutional and social reforms. Analysts note that a deceleration in activity is underway and that the medium-term prospects for the economy are contingent on the policy agenda of the new administration.

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