Mexico: Banxico likely to leave the policy rate unchanged at 7.50% - Nomura

Benito Berber, Research Analyst at Nomura, suggests that they expect the central bank of Mexico (Banxico) is likely to leave the policy rate unchanged at 7.50% at today’s meeting.

Key Quotes

“If MXN depreciates above 20.50 it may leave Banxico with no option other than to increase its policy rate. That said, we think the rate decision is difficult to assess; thus we assign a 60% probability to the scenario of no change and 40% to the scenario of a 25bp hike to 7.75%.”

“We maintain our stance that Banxico will commence an easing cycle in H2 after NAFTA 2.0 has been approved ‘in principle’ and once the 1 July elections have passed, but acknowledge that in a strong dollar regime it might not have room to ease the policy rate.”