Banxico to leave rate on hold at 7.50% - Rabobank

Eren Sengezer FXStreet

"We expect Banxico to leave the Mexican policy rate on hold at 7.50% on Thursday, 21^st June," Rabobank analysts argue.

Key quotes

"MXN OIS suggests a 25bp hike is fully priced in and the majority of analysts are also expecting a move. We sit in the minority with our call for no change in rates. Price pressures continue to ease and although currency depreciation does pose an inflationary risk further out, pass-through has generally been slightly lower and taken longer."

"Tariffs do, however, pose a risk of rising cost-push inflationary pressures. We see risk of further MXN depreciation heading into the July 1st Presidential election regardless of rates and as such, we expect Banxico to keep its powder dry until after then."

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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