Banco de México agreed to raise the price to 9.25% at its meeting this Thursday after making three increases of 75 basis points, analysts from UBS, Oxford Economics, Pantheon Macroeconomics and Bank of America Securities agreed.
“The resistance shown by the Mexican economy in the second quarter will give arguments for most board members to go on a more hawkish path this week,” said Andres Abbey, a senior Latin American economist at consultancy Pantheon Macro Economics. .
Hawkish, in the language of monetary policy, refers to a restrictive position, with zero tolerance for inflation.
Economists from Oxford Economics emphasized that of all the emerging central banks in Latin America, Banco de México will come under much more pressure than the Fed’s decisions and will have to continue raising interest rates at the same rate as the United States.
Economists at Bank of America Securities, led by Carlos Capistran, estimate that this one-to-one that Banxico will assume with the Fed, will lead to an upward cycle of Mexican interest rates to 11 percent.
Strategists at BofA Securities on the Banco de México Board of Governors said they remain concerned about inflation and the peso, particularly about the ever-high core inflation and about inflation expectations.
doubt in December
Meanwhile, UBS’s chief economist for Mexico, Rafael de la Fuente, considered the increase in inflation in the first two weeks of the month and the Fed’s stance leaving no room for doubt about what Banxico will do at the next currency policy meeting: the Federal Reserve.
Three of the four strategists estimate Banxico will continue its fourth consecutive increase in an average of three-quarters of a point in November: UBS, Bank of America Securities and Oxford Economics.
Indeed, Joanne Dumaine, an economist at Oxford Economics, explained that the central scenario for November is that Banxico will scale back the increase to leave it at half a point. But they do not rule out a further rise of 75 points.
The picture is not very clear for the overall economy of the Pantheon. Economist Andres Abadia thinks Mexico’s rate at the end of the cycle of increases will be 9.75% in November, after a recent increase of half a percentage point.
But he notes that the outlook remains highly conditioned by the Federal Reserve.
Economists at Bank of America estimate that the final rate of the bullish cycle for Bancasico will be 11 and will be reached in March of next year.
By the end of the year, they believe Banxico will leave the price at 10.50% after eight increases of 450 basis points, from 6% where it was in February.