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 - March 2023
Executive Summary
- All surveyed analysts expect Banxico to raise the overnight rate by 25bps to 11.25% at the March meeting.
- While the decision would represent a deceleration in the hiking pace, additional monetary tightening would be in line with prior guidance and is still deemed necessary due to the challenging inflation backdrop that remains in place, particularly for the core component.
- Analysts remain divided on the potential end date of the tightening cycle and therefore the committee’s guidance for upcoming meetings will be closely scrutinised.
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MNI Banxico Preview - March 2023.pdf
Banxico Board Maintain Hawkish Rhetoric
Most recent commentary from the central bank has cemented expectations that the board will maintain its hawkish stance this week. Banxico Governor Victoria Rodriguez reiterated the bank is still considering a hike at the March meeting, stating that “the increase that we could make in the next decision, we consider that it could be of a lesser magnitude” adding that “we’ll take into account the decision of the Fed and many other factors, to the extent that they affect the inflation panorama.”
Regarding the most recent events concerning banking distress in both the US and Europe, Rodriguez noted “the markets have been performing well and we observe liquidity and depth,” she said. “At this time, we do not see any risk for our financial system.”
Core Inflation Remains A Challenge For Central Bank Board
The latest print for the headline annual rate of inflation (bi-weekly data for mid-March) came in at 7.12%, below both the prior reading of 7.48% and surveyed median estimate of 7.24%. However, and keeping pressure on the Banxico board, core CPI was in line with expectations at 8.15% from 8.21%, and despite showing moderation since the February meeting, continues to show stubbornness and is yet to meaningfully recede (chart below).
Since the last Banxico decision, headline and core inflation expectations for year-end 2023 and 2024 continued to deteriorate. Within the latest central bank economist survey, the forecast for year-end 2023 was increased to 5.34% from 5.19% and for year-end 2024 the median estimate was raised to 4.09% from 3.98% previously. 
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.