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Pantheon Expect Banxico On Hold Next Week

MEXICO
  • Overall, the inflation picture continues to improve in Mexico, thanks to the lagged effect of tight financial conditions, lower commodity prices and improving supply side conditions. April’s drop in CPI inflation is strong enough to allow Banxico to move to the sidelines next week.
  • The MXN’s rebound and favourable base effects also suggests that the disinflation trend will continue over the next few months, allowing policymakers to ease their tone. The timing also would be convenient, as we expect the Fed to keep rates on hold over the coming months, and cut rates decisively from September or November onwards.

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