This week, volatility in Asian markets due to the increase in the reference rate in Japan and unfounded fears of a possible recession caused the Mexican peso to depreciate and trade at up to 20 pesos per dollar, its highest level in two years.
“With the exchange rate so volatile, a rate cut would be adding fuel to the fire,” said Luis Gonzali, vice president and chief investment officer at Franklin Templeton.
The specialist stressed that if Banxico wanted to defend the peso and was concerned about the depreciation of the currency – which could be inflationary – it would maintain the rate at the current 11%.
For Bank of America, the decision to maintain the reference rate will be divided by 4 to 1. In recent weeks, Deputy Governor Omar Mejía told Expansión that there is room to lower the interest rate due to the favorable behavior of underlying inflation.
Mejia stressed that he does not expect the increase in food prices, within the non-core component, to contaminate overall inflation. Mejia’s comments contrast with those of Deputy Governor Jonathan Heath, who recently said that non-core inflation was “very concerning.”
For CI Banco, the expectation is that the annual inflation rate will begin to decline in the next two weeks and close 2024 at around 4.60% from a previously estimated 4.2%.
“Core inflation has been falling, but at an increasingly slower pace and still at a level well above Banxico’s target,” the firm noted.
