Analysts at JP Morgan, Bank of America Securities (BOFA Securities), Deutsche Bank and BNP Paribas agreed that the Bank of Mexico will continue with an accommodative stance in its monetary decision this Thursday, May 18, and cut the rate to 11.25%. but will leave unchanged. ,
The Fed’s communication is more oriented toward monetary stabilization, along with a more stable behavior of inflation and indications from some members of the governing board are factors that drive BNP Paribas’ call, Mexico economist Pamela Diaz Lubate said.
Deutsche Bank experts agree with him, stressing that inflation has shown signs of stabilization with a downward trend.
Experts highlight that an important factor to consider in this decision will be the Bank of Mexico’s inflation forecast, as they will allow the market to identify how they expect inflation to act from the restrictive position of the rate cut. Are.
In addition, the chief economist for Mexico and Central America at JP Morgan, Gabriel Lozano, speculated that the central bank’s message would be: We have already raised rates by 725 basis points before June 2021 and now we should take care It monitors the situation and inflation expectations. We expect the rate to remain at 11.25% till this week.
In their opinion, the decision can be made by majority vote, with one dissenting vote, by the member who has been most aggressive in his position regarding inflation.
Hawkish, in monetary parlance, refers to a low tolerance for inflation on the part of the monetary policy committee.
They’ll leave the door open for a new rise
Carlos Capistran, chief economist for Mexico and Canada at BofA Securities, agrees with the forecast that the rate cycle will begin to reverse in an announcement scheduled for this Thursday, May 18.
They expect the Banco de México statement to leave the door open to the possibility of future increases if inflation poses a potential upside risk.
JP Morgan’s Lozano highlighted that the monetary stance is currently quite accommodative and estimated that the next rate change would probably happen by the first quarter of 2024.
Experts also agree that the central bank will keep rates steady throughout the year.
Diaz-Lubet stressed that even with a pause, monetary policy would remain accommodative. That is, it will be adequately oriented to face inflation.
Right now, the expected real rate is 6.58%, which is the result of the difference between the nominal rate collected by the Banco de México in its monthly survey, which is 11.25%, and inflation expectations for the next 12 months, which are at 4.67 percent.