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MEXICO: Valmex Say Banxico Has Made Clear It Will Increase Easing Pace

MEXICO
EM BulletMexicoBulletEmerging Market NewsNorth America
  • The chief economist at brokerage Valores Mexicanos has stated that Banxico has laid the foundations to increase the monetary policy easing pace next week. Valmex expect two 50bp cuts and two more 25 bps cuts this year, taking Banxico’s benchmark rate to 8% by the end of 2025, according to a Bloomberg article.
  • Banxico’s 2025 monetary policy plan, issued last Friday, changed the panorama for possible rate cuts this year. Valmex point out there is a risk that Banxico should be more prudent, or it may have to raise rates again in a short period of time, as Brazil did.
  • They believe that if US President Donald Trump imposes across-the-board 25% tariffs on Mexico, peso would sink to around 23 pesos per dollar for a couple weeks before gradually recovering. The base case remains for a more moderate or gradual tariff plan, where tariffs are used as a political tool, with peso trading around 20.80 at the end of 2025.
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  • The chief economist at brokerage Valores Mexicanos has stated that Banxico has laid the foundations to increase the monetary policy easing pace next week. Valmex expect two 50bp cuts and two more 25 bps cuts this year, taking Banxico’s benchmark rate to 8% by the end of 2025, according to a Bloomberg article.
  • Banxico’s 2025 monetary policy plan, issued last Friday, changed the panorama for possible rate cuts this year. Valmex point out there is a risk that Banxico should be more prudent, or it may have to raise rates again in a short period of time, as Brazil did.
  • They believe that if US President Donald Trump imposes across-the-board 25% tariffs on Mexico, peso would sink to around 23 pesos per dollar for a couple weeks before gradually recovering. The base case remains for a more moderate or gradual tariff plan, where tariffs are used as a political tool, with peso trading around 20.80 at the end of 2025.