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MEXICO: SocGen Sees Further 25bp Rate Cuts In Both November And December

MEXICO
EM BulletMexicoBulletGlobalEmerging Market NewsRegionNorth America
  • SocGen believes that Banxico is likely to maintain steady easing in November and beyond despite upside risks compared to the September statement, which signalled further rate cuts. SocGen sees another 25bp rate cut this week to 10.25%, followed by an additional cut of the same magnitude in December to 10.0%.
  • While the US election result could prove somewhat inflationary for Mexico in the short term, given pressure on the peso, it may be deflationary in the medium term if tariffs are indeed imposed and that affects Mexico’s trade and growth outlook.
  • Mexico’s economy remains weak and core disinflation is continuing, despite pressure on the peso and rising wages. Nevertheless, the upside risks to the inflation outlook will rise if the peso remains under prolonged pressure. That might also have implications for Banxico’s policy rate at some point in 2025/2026.
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  • SocGen believes that Banxico is likely to maintain steady easing in November and beyond despite upside risks compared to the September statement, which signalled further rate cuts. SocGen sees another 25bp rate cut this week to 10.25%, followed by an additional cut of the same magnitude in December to 10.0%.
  • While the US election result could prove somewhat inflationary for Mexico in the short term, given pressure on the peso, it may be deflationary in the medium term if tariffs are indeed imposed and that affects Mexico’s trade and growth outlook.
  • Mexico’s economy remains weak and core disinflation is continuing, despite pressure on the peso and rising wages. Nevertheless, the upside risks to the inflation outlook will rise if the peso remains under prolonged pressure. That might also have implications for Banxico’s policy rate at some point in 2025/2026.