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MEXICO: Banorte Expect Banxico to Continue Easing Next Week

MEXICO
EM BulletMexicoBulletGlobalEmerging Market NewsRegion
  • Banorte believe that core inflation will continue to drive the dovish wing of the central bank’s Board, likely sidelining the rebound in the headline print as they argue that it is due to transitory factors. In addition, the 25bps cut from the Fed will also be an important driver.
  • Nevertheless, Banorte recognise certain risks, mainly from: (1) An uncertain external environment, with Donald Trump’s win leading to higher volatility for local financial assets; and (2) better-than-expected 3Q24 GDP results, pointing to a more resilient economy.
  • Thus, Banorte reaffirm their view of a 25bps cut to the reference rate next week, taking it to 10.25%, with further cuts in subsequent meetings.
  • Previously, the bank had said that in 2025, they anticipate 25bp reductions in each of the 8 meetings scheduled for the year with the reference rate closing next year at 8.00%.
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  • Banorte believe that core inflation will continue to drive the dovish wing of the central bank’s Board, likely sidelining the rebound in the headline print as they argue that it is due to transitory factors. In addition, the 25bps cut from the Fed will also be an important driver.
  • Nevertheless, Banorte recognise certain risks, mainly from: (1) An uncertain external environment, with Donald Trump’s win leading to higher volatility for local financial assets; and (2) better-than-expected 3Q24 GDP results, pointing to a more resilient economy.
  • Thus, Banorte reaffirm their view of a 25bps cut to the reference rate next week, taking it to 10.25%, with further cuts in subsequent meetings.
  • Previously, the bank had said that in 2025, they anticipate 25bp reductions in each of the 8 meetings scheduled for the year with the reference rate closing next year at 8.00%.