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JPMorgan Say Risk For Even Later Start To Easing Cycle

  • The policy guidance from Banxico in the last few days is precisely trying to acknowledge, in JPMorgan’s view, the need to cool down the economy to avoid further overheating as the distortions associated with this would be difficult to correct if long-lasting.
  • JPM already expect the central bank to remain on hold until March 2024, but the risk is for a late start of the easing cycle, probably with the moving window now between March and August — as suggested by the minutes and recent comments from one deputy governor.
  • Regarding retail sales data due this week, JPM foresee a see-saw pattern that not only should reflect a rotation in consumption patterns but also consumption exhaustion after a heavy spending spree and tighter financial conditions amid sticky inflation pressures.
  • Real wage gains are expected to fuel further spending, but JPM do not see last year’s pace as sustainable and expect to see sales gradually stabilizing toward 4% in annual terms by year-end. All in, they expect August sales marginally falling 0.2%samr, consistent with 3.8%oya.

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