Mexico: Banxico watching for looser fiscal policy – Standard Chartered

In view of Daniel Sinigaglia, Latam Economist at Standard Chartered, the minutes of Banxico’s 4 October monetary policy meeting did not deliver a clear picture of its short-term intentions.

Key Quotes

“While Banxico kept rates stable at 7.75% at the meeting, its notoriously hawkish stance appeared to strengthen given the split decision, with one vote for a 25bps hike.”

“Based on the minutes, we see a more divided board, worried about structural issues that seldom inform short-term inflationary risk assessments and monetary policy decisions.”

“Our key takeaway from the minutes is that Banxico may have further reinforced its disposition to act if necessary.”

“We maintain our view of rate cuts starting in early 2019, despite Banxico’s tough stance on inflation and its explicit attempt to dispel the perception that the tightening cycle that started in December 2017 is over.”