MXN: Cautious stance on rate cuts – Societe Generale
|Societe Generale's report outlines the outlook for the Mexican Peso (MXN), indicating that Banxico is expected to maintain the policy rate at 7.00%. It highlights the central bank's cautious approach and the criticism it faces for lowering rates before achieving inflation convergence. The report also mentions a forecast for rate cuts later in the year, while noting the challenges for further appreciation of the peso.
Policy rate and inflation outlook
"Our house call is for 25bp cuts in 1H and 2H to 6.50% at year-end."
"Seasonal trends have historically supported the peso in February but further appreciation and a break below 17.00 LT ascending trendline going back to 2008 may prove challenging and dependent global de‑dollarization trades toward commodities."
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