Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI Banxico Preview - Dec 2022
Executive Summary
- All surveyed analysts expect Banxico to raise the overnight rate by 50bps to 10.50% at the December meeting.
- While the decision would represent a deceleration in the hiking pace, additional monetary tightening is still deemed necessary due to a further deterioration in core CPI data and expectations as well as strong domestic growth dynamics.
- With that said, cumulative tightening to this point and the consensus assumption that the terminal rate will be reached in early 2023 places the focus on the tone of the statement and any adjustments made to the committee’s forward guidance that may signal the end of the hiking cycle.
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MNI Banxico Preview - December 2022.pdf
Core Inflation Expectations Remain A Challenge For Central Bank Board
The latest print for the headline annual rate of inflation came in at 7.80%, below the surveyed median estimate of 7.94 and notably below the prior reading of 8.41%. However, keeping pressure on the Banxico board, core CPI rose to 8.51% from 8.42%, extending the continuous uptrend for the metric (chart below), however the reading was slightly below the median surveyed estimate.
Within the latest central bank survey, the median expectation for 2022 year-end inflation was cut from 8.54% to 8.36% and more importantly, the forecast for year-end 2023 was also trimmed to 5.01% from 5.09%. While these readings represent a welcome development, analysts note that core expectations did continue to edge higher, providing further evidence that medium-term expectations regarding the board’s most important metric potentially remain un-anchored. It is worth noting that on top of these adjustments to inflation, 2022 GDP was also raised to 2.79% from 2.12%, following the higher revision to third quarter GDP as well as the healthy economic activity readings for September.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.