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MNI Banxico Review – March 2023: Flexible Guidance

MNI Banxico Review - March 2023

MNI Banxico Review - March 2023

Executive Summary

  • Banxico’s governing board decided to hike the overnight rate by 25bps to 11.25%, in a unanimous decision. The decision was in line with consensus, with all but one surveyed analyst expecting a 25bp increase.
  • Most importantly, the statement did not commit to additional tightening at the next meeting. Instead the committee decided to leave the door open, stating that “for its upcoming decision, the Board will take into account the inflation outlook, considering the monetary policy stance already attained."
  • Indeed, analysts are divided between whether the March hike does represent the last in the cycle or whether the board intends to hike further, but have provided optionality given the high degree of uncertainty across global financial markets and for the inflation outlook.
  • There is a greater degree of certainty surrounding the importance of upcoming CPI prints as well as any details within the minutes, due on April 14.
  • USDMXN moderately appreciated following the decision from 18.05 to 18.12, however, this was largely paring the day’s prior decline. Since then, the pair continues to gravitate towards the 18.00 mark, eyeing 17.8981, the Mar 9 low and a key short-term support.

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