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MNI Banxico Review – Nov 2023: Dovish Tweak to Forward Guidance

MNI Banxico Review - Nov 2023

MNI Banxico Review - Nov 2023

Executive Summary

  • Banxico’s governing board decided to keep the overnight rate unchanged at 11.25%, in a unanimous decision.
  • In a key dovish adjustment to the forward guidance, Banxico now believe “the reference rate must be maintained at its current level for some time”. This compares to prior guidance that it expected the hold rates “for an extended period”.
  • The statement, while retaining its hawkish posture, included various other dovish tweaks which points towards Banxico acknowledging that the conditions desired to start an easing cycle are getting closer.
  • Markets were surprised by the statement and reacted accordingly. USDMXN rose the best part of 2% to reach a fresh session high of 17.8943, although hawkishly interpreted comments from Fed’s Powell may have exacerbated the move.

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