“What the Central Bank is seeing is to take advantage of an economic slowdown to normalize monetary policy more quickly,” Luis Gonzali, vice president and co -director of investments in Franklin Templeton said in an interview.
The specialist stressed that with an economy in recession, inflation yields land, which makes the path easier to the Central Bank to adjust the interest rate.
On the future of cuts, analysts do not agree with uncertainty conditions. Franklin Templeton estimates three cuts: two of 50 points in May and June, and another more than 25 points in August, before pausing.
But Banamex believes that the cuts will be made throughout the year: up to three of 50 points and the rest of 25 points.
“We are seeing another cut more than 50 base points in June and, although it is not our central scenario for now, we think there is a risk that even in August they want to make a cut more than 50 points,” said Paulina Anciola, deputy director of Economic Studies in Banamex.
The specialist stressed that Mexico will not be saved from the recession, the discussion is how depth this will be.
The Fed will not be relevant for the moment
Although Banxico usually follows closely the movements made by the Federal Reserve in the United States, the panorama of a recession in Mexico gives the Central Bank the freedom to detach from the Fed.
For analysts, once Banxico takes the rate to levels of 7.50%, the discussion of following their American counterpart will return.
“Assuming that the Fed does not move (the fees) in the year and Banxico lowers that differential, of around the 300 base points, there it has to put this idea on the table,” Gonzali said. “Today we are still far to see a banxic worried about that rate differential and, therefore, they can act without the need to turn the Fed.”
