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MNI Banxico Review – Sep 2024: Gradual Easing Cycle Continues

Banxico’s governing board cut the overnight rate by 25bp to 10.50%, in line with the majority of analysts.
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Executive Summary

  • Banxico’s governing board cut the overnight rate by 25bp to 10.50%, in line with the majority of analysts. The decision was split 4-1, with Deputy Governor Heath voting for no change.
  • The accompanying statement struck a slightly more dovish tone, as inflation forecasts were trimmed and downside risks to growth remain, with the Board signalling the possibility of a continuous cutting cycle ahead.
  • However, the Board did not indicate that the easing pace would accelerate at this juncture, and analysts expect a cautious 25bp cutting pace to continue for now.
  • Market reaction was limited, with MXN unwinding modest losses from ahead of the decision as concerns that Banxico might deliver a larger 50bp cut proved unfounded.

Click to view the full review: MNI Banxico Review - Sep 2024.pdf

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Executive Summary

  • Banxico’s governing board cut the overnight rate by 25bp to 10.50%, in line with the majority of analysts. The decision was split 4-1, with Deputy Governor Heath voting for no change.
  • The accompanying statement struck a slightly more dovish tone, as inflation forecasts were trimmed and downside risks to growth remain, with the Board signalling the possibility of a continuous cutting cycle ahead.
  • However, the Board did not indicate that the easing pace would accelerate at this juncture, and analysts expect a cautious 25bp cutting pace to continue for now.
  • Market reaction was limited, with MXN unwinding modest losses from ahead of the decision as concerns that Banxico might deliver a larger 50bp cut proved unfounded.

Click to view the full review: MNI Banxico Review - Sep 2024.pdf