MXN: Banxico weighs tactical hike to keep FX-related price pressure in check - ING
|ING’s Gustavo Rangel expects Banxico’s new Governor Diaz de Leon to begin his tenure at the helm of the monetary authority with a rate hike.
Key Quotes
“Authorities have grown more concerned with the inflation outlook given the persistence of price pressures seen recently and potential for further FX weakness in the near-term, amid NAFTA and electoral uncertainties. Banxico’s board has also become more concerned about keeping the US/Mexico interest rate differential intact.”
“Lastly, burnishing Banxico’s inflation-targeting credentials, after Carstens departure, is another tactical consideration that could play a key role in the bank’s decision-making this week. MXN may find some temporary reprieve from any rate hike – but we note (a) the TIIE curve is pricing in a 25bps hike in 3M; (b) NAFTA is a key driver. Move above 19.00 looked inevitable; a run-up to 19.40 highly likely now.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.