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
Executive Summary:
- Banxico are widely expected to hike the overnight rate by 25 bps to 4.75%.
- Despite continued disagreement among the governing board, the persistence of inflationary pressures is likely to prompt another closely fought swing towards further monetary policy tightening.
- Inflation projections will be a focus for hints on the future path of policy with uncertainties surrounding the upcoming governorship transition a lingering unknown for markets.
Click to view the full preview: MNI Banxico Preview - September 2021.pdf
Inflationary Pressures Fail To Abate
Latest bi-weekly data confirmed the ongoing price pressures with the annual headline printing 5.87% exceeding estimates of 5.72%. While the reading is broadly in line with CPI levels at the August meeting, the latest uptick from August's 5.58% will raise concerns among the governing board. Monthly core CPI surprised again at 0.31% vs. Exp. 0.24% bringing the annual level to 4.92% and extending the upward trajectory throughout 2021, heightening risks to the price formation process (a regular feature in the monetary policy statements). The latest set of inflation projections attached to the statement will be a focus for markets with many analysts expecting revisions to an already stale set of forecasts.
Central Bank Commentary Confirms Data Dependency
Throughout September, central bank comments have added little to the minutes provided for the August meeting. Governor Díaz de León highlighted that lower inflationary pressures will become more evident in the quarterly data over the latter half of the year while acknowledging that the current level of rates is still providing stimulus to the economy.
Perhaps more importantly, in his position as the 'swing' voter, Deputy Governor Heath described the tight position between bolstering the recovery and staving off inflationary pressures. Analysts believe this to be in line with his supposed position in the latest minutes, emphasising his data dependent stance and likely increasing the prospect of him remaining in the hiking camp.
MNI/Bloomberg
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.