Ir para menu Ir para conteúdo principal Ir para rodapé
We expect the easing cycle to begin in March.
2024/02/08 | Julio Ruiz

Banco de Mexico (Banxico) unanimously maintained the policy rate at 11.25%, in line with our forecast and market expectations (as per Bloomberg). The updated forward guidance, in our view, opened the door for a rate cut in March: “In the next monetary policy meetings, it will assess, depending on available information, the possibility of adjusting the reference rate”. The Board will consider the progress on the inflation outlook and associated risks, as well as the impacts of the required path of monetary policy on the inflation projection.


The statement also suggests board members (most of them at least) are downplaying the recent non-core led rebound in headline inflation.  Since the last monetary policy meeting, while headline annual inflation increased, core inflation, which better reflects the trend in inflation, continued decreasing. Moreover, as we expected, the forecast for headline inflation was revised upwards slightly for the short term, but core inflation projections remained practically unchanged throughout the forecast horizon. Still, both headline and core inflation are expected to converge to the target in 2Q25, as in the previous communique. See charts below.

The balance of risks for inflation remained tilted to the upside. Upside risks to inflation include, persistence of core inflation, currency depreciation, greater cost related pressures, a greater than expected resilience of the economy, climate related impacts and the intensification of geopolitical conflicts. On the other hand, downside risks for inflation include a faster than anticipated slowdown of the global economy, lower pass-through from cost related pressures and the appreciation of the currency.
In our view, the statement is consistent with our call of the easing cycle beginning with a 25-bp cut in March, assuming that core inflation continues behaving as expected by the central bank.  While further pressures in non-core inflation are a risk to our call, board members seem to be downplaying it. We expect a gradual easing cycle given lingering risk to inflation, with our end of year policy rate forecast at 9.50%. In two weeks, the minutes will be published with more details about the decision.