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.
Banxico Review - December 2021
Executive Summary
- Banxico's governing board decided to hike the overnight rate by 50bps to 5.5%.
- The board voted 4-1 in favour of the 50 basis point hike, with Deputy Governor Esquivel the sole dissenter, however the most dovish member did vote to increase the key rate by a smaller 25bps for the first time.
- Headline and core inflation forecasts were once again revised upwards and the statement no longer mentions that current shocks on inflation are largely considered to be transitory.
- Analysts agree that the board’s new communique is a hawkish turn, however, there are disagreements between both the forecasts for the February decision and over the terminal rate.
Click to view the full review: MNI Banxico Review - December 2021.pdf
In the following paragraph, the board assesses their action appropriately adjusts the monetary policy stance to the necessary trajectory, however, some analysts have highlighted the phrase “on this occasion” could suggest a one-off acceleration.
“The Governing Board evaluated the magnitude and diversity of the shocks that have affected inflation and the factors that determine it, along with the risk of price formation becoming contaminated, and the challenges posed by the ongoing tightening of monetary and financial global conditions. Based on these considerations, on this occasion, the Board decided to increase the target for the overnight interbank interest rate by 50 basis points to 5.5%. With this action, the monetary policy stance adjusts to the trajectory required for inflation to converge to its 3% target within the forecast horizon”
The complete set of revised inflation forecasts were set out in the following table within the statement:
Source: Banxico
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.