- 21 out of 26 economists forecast Banxico from 8.50% to 8.00% next week.
- Deputy Governor Heath Caution signal, conducive to the interval to evaluate the data.
- Most look at releasing the mitigation rate, and the rates are probably 7.50% to the 2025 quarter.
It is anticipated that Banco de México (Banxico) will continue the soothing cycle next week, despite the latest inflation reports in Mexico suggesting that the risk is tilted up. Inflation in May exceeded 3% of the bank’s goal, increasing the fears that the central bank will continue to reduce the rates.
Most economists expect the fourth in a row cut by 50 BPS, although the connections are growing by a slower pace
On Friday, the Reuters survey revealed that 21 out of 26 economists The Central Bank project will facilitate the rates from 8.50% to 8%. It would be a fourth reduction in the 50-spas (BPS) rate in a row.
Of the five economists, three expect a gradual approach of Banxico, while the other two expect that the Mexican institution will maintain unchanged rates.
Last week, the deputy governor Jonathan Heah told Reuters that he thinks that 50 BPs should be stopped until further data was assessed.
According to economists surveyed by Reuters, 15 participants indicated that Banxico can sluggish down the pace of facilitation at subsequent meetings, and then August is planned. Most economists surveyed expect that the main reference interest rate of Mexico will remain 7.50% in Q3 2025.
BANSYK FAQ
The Mexico Bank, also known as Banxico, is the central bank of the country. His mission is to preserve the value of the currency of Mexico, Mexican peso (MXN) and find out monetary policy. To this end, its main goal is to maintain low and stable inflation in target levels – at 3%or approaching the target, half in the tolerance band from 2%to 4%.
The main tool Banxico to conduct monetary policy is to set interest rates. When inflation is above the target, the bank will try to tame it, raising the rates, which makes it more steep for households and companies to borrow money, and thus cooling the economy. Higher interest rates are generally positive for the Mexican peso (MXN), because they lead to higher crops, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN. The key factor is the difference in foot compared to USD or the way Banxico will determine interest rates compared to the US Federal Reserve (FED).
Banxico meets eight times a year, and its monetary policy has a immense influence of the decision of the US Federal Reserve (FED). That is why the Central Bank Decision Committee usually gathers a week after the Fed. In this way, Banxico reacts and sometimes predicts monetary policy means specified by the Federal Reserve. For example, after the Covid-19 pandemic, before the Fed raised the rates, Banxico did it for the first time, trying to reduce the chances of significant depreciation of Mexican peso (MXN) and prevent capital outflows that can destabilize the country.
