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MEXICO: Goldman Sachs Expects Banxico QIR To Maintain Recent CPI Forecasts

MEXICO
EM BulletMexicoBulletEmerging Market NewsNorth America
  • Banxico will publish its Q3 Inflation Report tomorrow, with updated forecasts for growth and headline/core inflation over the relevant horizon for monetary policy. Goldman Sachs expects the central bank to repeat the forecasts of the Nov 14 MPC meeting, entailing a higher headline inflation forecast for end-2024 compared with the previous QIR, but with convergence to the 3.0% target still expected for 4Q2025.
  • On growth, the Q2 QIR was forecasting growth of 1.1%-1.9% for this year and 0.4%-2.0% in 2025, and GS does not anticipate significant revisions to this outlook.
  • In order to calibrate the monetary policy path, GS will pay particular attention to the characterisation of the balance of risks to inflation and growth, and the list and ranking order of both upside and downside risks to inflation and growth. They will also pay particular attention to the revised forecast for the output gap and labour market slack estimates. A less tight goods market would add policy room for Banxico to normalise the monetary stance at a faster pace.
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  • Banxico will publish its Q3 Inflation Report tomorrow, with updated forecasts for growth and headline/core inflation over the relevant horizon for monetary policy. Goldman Sachs expects the central bank to repeat the forecasts of the Nov 14 MPC meeting, entailing a higher headline inflation forecast for end-2024 compared with the previous QIR, but with convergence to the 3.0% target still expected for 4Q2025.
  • On growth, the Q2 QIR was forecasting growth of 1.1%-1.9% for this year and 0.4%-2.0% in 2025, and GS does not anticipate significant revisions to this outlook.
  • In order to calibrate the monetary policy path, GS will pay particular attention to the characterisation of the balance of risks to inflation and growth, and the list and ranking order of both upside and downside risks to inflation and growth. They will also pay particular attention to the revised forecast for the output gap and labour market slack estimates. A less tight goods market would add policy room for Banxico to normalise the monetary stance at a faster pace.