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5 May 2016
Banxico expected to stay put today – Rabobank
Senior Market Strategist at Rabobank Christian Lawrence sees the Mexican central bank keeping its monetary stance unchanged at today’s meeting.
Key Quotes
“We, in line with the Bloomberg consensus, fully expect no-change to the 3.75% Mexican policy rate when it is announced at the Banxico meeting on Thursday 5th May. Of the 25 analysts surveyed (including ourselves) by Bloomberg, 25 expect no-change and almost nothing is priced into front-end rates for this week’s meeting”.
“As a bit of background, the June 2014 50bp cut to 3.00% ended the easing cycle and rates were left on hold at that low until the announcement of a 25bp hike in December following the Fed hike”.
“This year rates were left on hold at the January meeting before an inter-meeting decision on 17th February to raise rates 50bp and scrap the automatic FX stabilization programme in favour of a switch to discretionary intervention. This was clever of Banxico as they waited until price action had turned in their favour (i.e. USD/MXN had just come off the highs) before announcing any action so as to piggy-back the market move rather than trying to fight against it”.
Key Quotes
“We, in line with the Bloomberg consensus, fully expect no-change to the 3.75% Mexican policy rate when it is announced at the Banxico meeting on Thursday 5th May. Of the 25 analysts surveyed (including ourselves) by Bloomberg, 25 expect no-change and almost nothing is priced into front-end rates for this week’s meeting”.
“As a bit of background, the June 2014 50bp cut to 3.00% ended the easing cycle and rates were left on hold at that low until the announcement of a 25bp hike in December following the Fed hike”.
“This year rates were left on hold at the January meeting before an inter-meeting decision on 17th February to raise rates 50bp and scrap the automatic FX stabilization programme in favour of a switch to discretionary intervention. This was clever of Banxico as they waited until price action had turned in their favour (i.e. USD/MXN had just come off the highs) before announcing any action so as to piggy-back the market move rather than trying to fight against it”.