May 30, 2024 17:41 GMT
MEXICO: Banorte Also Forecasting 10.00% Year-End Rate
MEXICO
- Regarding updated estimates in Banxico’s QIR, Banorte highlight the revision lower to this year’s GDP by 40bps to 2.4%, with much of the adjustment related to lower-than-expected growth in 1Q24. It is important to note that the output gap would return to negative territory by mid-2025 on the back of this, which Banxico did not contemplate in its estimates since the 2Q23 QR.
- Considering this, other points within the document and responses from Board members, Banorte maintain their view of a 25bps in June, taking the rate to 10.75%.
- After this, Banorte believe graduality will continue, with a pause in August and continuous cuts afterwards –of a 25bps magnitude– starting in September. As a result, the reference rate would close 2024 at 10.00%.
- Nevertheless, given recent inflation dynamics, the risks that a cut will not materialize in the upcoming decision has increased, which would only worsen in case of new upward surprises.
149 words