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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 - June 2023
Executive Summary
- All analysts are expecting Banxico to keep rates unchanged at 11.25%, in line with prior guidance from the committee.
- A marginal softening of the inflation data, combined with the committee’s most recent rhetoric point to this being a straightforward decision for the committee and one that can be made without any dissents.
- However, markets will pay attention to any tweaks to the statement language and the updated set of inflation projections for further clues on when an easing cycle can be expected.
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MNI Banxico Preview - June 2023.pdf
Policy To Remain Restrictive For “As Long As Possible” To Ensure Inflation Convergence
Since the May meeting, Banxico officials have reiterated their intention to hold rates at current levels having explained in the May statement that “it will be necessary to maintain the reference rate at its current level for an extended period” to achieve an orderly convergence of headline inflation to target.
Deputy Governor Jonathan Heath indicated that Banxico will not lower rates for at least three meetings and later stated that “we want to keep the monetary policy in the restrictive zone for as long as possible — and that’s way more than three decisions”. Heath added in an interview that the market sees the first adjustment lower between Q4 2023 and Q1 of next year, but the board’s decision will be “data dependent”.
In similar vein, Governor Victoria Rodriguez said that the central bank will hold interest rates at a record-high for at least the next two meetings before beginning to consider easing. The committee intend to exercise caution at upcoming meetings as policymakers have no set timeline for easing policy from the current 11.25%, Rodriguez added during a presentation of the bank’s quarterly report.
Given the comments, the bar for any surprises at Thursday’s meeting is extremely high. However, analysts will scrutinise the statement and the updated inflation forecasts to fine tune their assessment for future policy.
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.