One of the reasons why Banxico would not make a 50-point cut It is because they made rate cuts long before the Fed, having an advantage of 50 basis points, in addition to the fact that the members of the Governing Board have sent signals to the market that the cuts will be made prudently and that despite taking into account It takes into account the movements of the Fed, it does not strictly follow its movements.
Arely Medina, research economist of Economic Studies at Citibanamex, considered that we can now speak of a downward cycle of the rate and that lower economic activity, as well as weakness in the labor market, will be causing inflation to converge to the goal. of 3%.
“As economic activity slows down and the labor market slows down, which we also have signs of, we are also anticipating the slowdown in services inflation a little more,” Medina said.
The economist added that in 2025 a slower pace of public spending is expected, which will slow down economic activity and, therefore, help contain inflation.
“There is no case to think they can make a 50-point cut. If this were the case, it would be a surprise for the market and Banxico does not like to surprise,” Luis Gonzali, vice president and director of investments at Franklin Templeton, added in an interview.
It is anticipated that there will be a new period of instability in the markets as a consequence of the elections in the United States and the evolution of secondary laws in the reform of the judiciary, although Medina maintained that the market has already discounted the risks of this reform.
Both Gonzali and Medina expect that next Thursday’s vote will be 3 to 2 or 4 to 1, with Irene Espinosa being the member of the Board who remains firm in her position of not making interest rate cuts.
In past decisions, Governor Victoria Rodríguez, as well as Deputy Governors Omar Mejía and Galia Borja have voted to reduce the interest rate.
