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MEXICO: Itaú Forecasting 25BP Cut at June 27 Meeting, Year-End Rate at 10.00%

MEXICO
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  • Itaú believe the tone of yesterday’s Banxico inflation report is similar to May’s monetary policy statement, with a cautious tone on the inflation environment (persistent services CPI), but open to adjust the reference rate in the coming meetings given the progress achieved in the disinflationary process.
  • Comments from Board members in the press conference also suggest that most of them are open for a rate cut in the next meeting. Itaú’s base case is for Banxico to cut its policy rate by 25-bp in the June 27 meeting (reaching a level of 10.75%).
  • Itaú think further rate cuts are likely during the rest of the year, but with another pause in between given still lingering risks to inflation. In total, Itaú expect four rate cuts of 25-bp and a pause during the rest of the year, taking their end of year policy rate estimate to 10.00%.
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  • Itaú believe the tone of yesterday’s Banxico inflation report is similar to May’s monetary policy statement, with a cautious tone on the inflation environment (persistent services CPI), but open to adjust the reference rate in the coming meetings given the progress achieved in the disinflationary process.
  • Comments from Board members in the press conference also suggest that most of them are open for a rate cut in the next meeting. Itaú’s base case is for Banxico to cut its policy rate by 25-bp in the June 27 meeting (reaching a level of 10.75%).
  • Itaú think further rate cuts are likely during the rest of the year, but with another pause in between given still lingering risks to inflation. In total, Itaú expect four rate cuts of 25-bp and a pause during the rest of the year, taking their end of year policy rate estimate to 10.00%.