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MEXICO: Analyst Views Ahead Of Tomorrow’s Banxico Minutes

MEXICO
EM BulletMexicoBulletEmerging Market NewsNorth America
  • Banxico will publish the minutest to its Nov 14 MPC meeting tomorrow, when it cut the policy rate by 25bp to 10.25% in a unanimous decision. The forward guidance hinted at further rate cuts ahead, but did not signal any acceleration of the easing pace. See the full MNI review, with analyst views here.
  • In the minutes, Goldman Sachs will be looking for discussion about the appropriate near-term monetary policy stance and around the conditions that would validate an acceleration of the pace of rate cuts. They expect MPC directors to stress that activity is going through a period of weakness and that the balance of risks remain skewed to the downside. The majority of directors are expected to state that risks to inflation remain biased to the upside, but to underscore that core inflation, which better captures the inflation trend, has continued to moderate.
  • JP Morgan believes that the motivation for a united front can be found in the FOMC decision a week earlier. While the most compelling argument to proceed with lower rates has been the tight policy stance, with the Fed now in easing mode as well, it seems the COPOM has closed ranks in order to gain policy flexibility sooner rather than later, and JPM thinks the board will finally address the “relative monetary stance” in its discussion. At this point, the unanimity suggests changing gears to 50bp cuts is a real possibility soon.
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  • Banxico will publish the minutest to its Nov 14 MPC meeting tomorrow, when it cut the policy rate by 25bp to 10.25% in a unanimous decision. The forward guidance hinted at further rate cuts ahead, but did not signal any acceleration of the easing pace. See the full MNI review, with analyst views here.
  • In the minutes, Goldman Sachs will be looking for discussion about the appropriate near-term monetary policy stance and around the conditions that would validate an acceleration of the pace of rate cuts. They expect MPC directors to stress that activity is going through a period of weakness and that the balance of risks remain skewed to the downside. The majority of directors are expected to state that risks to inflation remain biased to the upside, but to underscore that core inflation, which better captures the inflation trend, has continued to moderate.
  • JP Morgan believes that the motivation for a united front can be found in the FOMC decision a week earlier. While the most compelling argument to proceed with lower rates has been the tight policy stance, with the Fed now in easing mode as well, it seems the COPOM has closed ranks in order to gain policy flexibility sooner rather than later, and JPM thinks the board will finally address the “relative monetary stance” in its discussion. At this point, the unanimity suggests changing gears to 50bp cuts is a real possibility soon.