Persistent inflation despite weak activity
Easing cycle goes on amid a wide negative output gap
Further rate cuts ahead are likely.
Limited government response to the outbreak
Weaker global economy opens room for a bolder response by Banxico
AMLO achieved responsible fiscal results so far
Minimum wage hike risks inflation convergence
The potential approval of the USMCA in U.S. Congress will help reduce uncertainty in the economy.
We now expect the policy rate to end 2019 at 6.75% (before 7.00%)
A clearer deceleration in core inflation will be key for frontloading the easing cycle
Responsible fiscal targets, but the risk of fiscal slippage is high
Banxico needs to see a larger reduction in core CPI before starting an easing cycle.
More uncertainty from the domestic side
New tariff threats cannot be discarded in the future
Healthy public finances in 1Q19, but risks remain
Further support for PEMEX is expected
After his first 100 days in power, AMLO enjoys strong support
Further rate increases can’t be taken for granted
Domestic markets were rattled after several radical legislative initiatives emerged.
Airport referendum results raises concerns of how future policy decisions will be made
More details about AMLO’s policy direction emerge
AMLO’s extra spending promises could jeopardize public finance stability
AMLO gains control of congress.
NAFTA, elections, and external risks intensified
We continue to expect that a successful renegotiation of NAFTA will be announced in 2Q18.
We do not expect further interest rate increases.
Risks related to Nafta and Elections persist.
We have reduced our growth forecast for this year, but revised our inflation forecast up.
Earthquakes pose meaningful risks on activity and fiscal accounts, but not on inflation
Given the solid performance of the economy in 1H17, we have revised our growth forecast for 2017 to 2.3%, from 2% previously.
Board members agree that rate cuts will not be implemented anytime soon
Board members have contrasting views on the future course of monetary policy
Political establishment wins regional elections
Growth surprised to the upside, while inflation conditions deteriorated.
Uncertainties over trade relations with the U.S. remain, but have diminished recently.
Mexican peso has been supported by perception of lower protectionism risk and Central Bank intervention
Uncertainty over bilateral relations with the US is the main risk
The liberalization of gasoline prices will be beneficial for the fiscal accounts.
Mexico’s economic activity accelerated in 3Q16
The outcome of the U.S. presidential election has weakened Mexico’s economic prospects.
A potential defeat of Trump would help the peso.
Fiscal consolidation disappoints, while the current-account deficit peaks
In coming quarters, a rebalancing of growth sources toward firmer manufacturing exports and softer consumption is likely.
We expect additional interest rate increases in Mexico in 2016 only if exchange-rate depreciation pressures return.
As the peso recouples with its fundamentals, additional rate hikes this year are unlikely.
While Mexico’s net public debt is rising to less comfortable levels, authorities are taking action to stabilize it.
The board would not react automatically to higher interest rates in the U.S.
the decline in oil prices is negatively affecting activity, fiscal revenues, exports and the exchange rate.
The slow recovery of U.S. industrial production, the ongoing fiscal consolidation and low oil prices pose important challenges.
We expect GDP to grow 2.8% in 2016.
We expect the central bank to raise the policy rate only in 1Q16, and after the Fed (in December).
Reacting to lower oil revenues.
We reduced our growth forecast for next year to 2.8% (from 3.0%).
The recent further decline in oil prices increases the risks for the coming oil field auctions.
We believe that the central bank will start its tightening cycle in 1Q16, once the board has more assurance that the economic recovery is solid enough.
We now see rate hikes only in 1q16.
We expect the hiking cycle in Mexico to start in September, in conjunction with the Fed’s liftoff
We currently expect Mexico’s central bank to deliver an interest rate hike in June, but there are balanced risks to this forecast.
The Finance Ministry announced expenditure cuts worth 124 billion pesos, or 0.7% of GDP.
The labor market continues to evolve favorably.
The lower dynamism of economic activity led us to reduce our GDP growth forecast to 2.2% from 2.4% previously.
Mexico’s IGAE (monthly proxy for GDP) came in at 1.3% year over year in August
The demand-side breakdown of the GDP indicated that the external sector was the main engine of growth in 2Q14.
The GDP figures for 2Q14 confirmed the recovery of the economy.
Mexico’s IGAE (monthly proxy for GDP) was weak in May
Mexico’s IGAE (monthly proxy for GDP) recovered in April.
Mexico’s economy disappointed during 1Q14.
Enrique Peña Nieto sent to congress on April 30 the secondary legislation related to the constitutional reform approved in late 2013.
The IGAE (monthly GDP proxy) came in at 0.8% year over year
Recent activity indicators show that the economy has not rebounded yet.
Activity indicators available for 4Q13 show that the recovery seen in the previous quarter was short-lived.
We do not expect policy rate moves this year, but we see rate hikes in 2015.
A political-electoral bill will likely be approved over the next few days.
The end of the easing cycle, a successful energy sector reform and the economic recovery will likely support the Mexican peso next year.
Mexico's government presented the tax reform bill with its proposed 2014 budget.
Enrique Peña Nieto announced the government’s reform proposal for the energy sector.
Mexico’s PAN (the largest opposition party) has presented an aggressive energy reform bill.
We revised our growth forecast down for this year, to 2.5% (3.2%, previously).
Slow public expenditures also reduced growth in 1Q13.