Mexico: Little space for 2019 cuts from Banxico - TDS

Sacha Tihanyi, deputy head of emerging markets strategy at TD Securities, explains that the Banxico's statement has placed a substantial focus on recent developments in core and non-core inflation.

Key Quotes

“Core inflation pressures were seen as due to certain food prices as well as services which were partly bolstered by the Easter holiday. The central bank did not sound placated however by any seasonality effects, and noted that absent those effects, services prices increased. Banxico also noted an increase in inflation risk premiums embedded in financial market instruments.”

“In its risk outlook for inflation, Banxico continued to sound concerned with wage dynamics.”

“In its outlook component of the policy statement, Banxico states that it sees core and headline price increases as being transitory, and thus the current stance is viewed as consistent with convergence to target.”

“We believe it is the case that if there is any indication that great-than-productivity wage increases are having a broad impact on costs, which are then being passed on to the overall price complex (particularly services), then it is likely that Banxico could be forced into action.”

“In effect we believe that it is completely unjustified for the market to price in any potential rate cuts before the end of the year. This statement reflects hawkish concern, and while not saying that more action is coming, it for the time being closes the door on any notion that the next "certain" step in the policy rate this year is lower.”




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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD steady around 1.1160 post-FOMC Minutes

The US Federal Reserve document failed to impress, with the market ignoring the release, overshadowed by the Brexit drama and the more updated statement from Chief Powell last Monday.


GBP/USD recovers from 4-month low despite UK’s political uncertainty

Despite growing speculations over the UK PM May’s resignation, GBP/USD pulls itself back from the lowest since mid-January to 1.2665 during the initial Asian session on Thursday.


USD/JPY reverses post-FOMC minutes gains to 110.40

The USD/JPY pair runs through fresh offers in early trades and reverses post-FOMC minutes gains to near 110.40, tracking fresh weakness in S&P 500 futures and Treasury yields while the greenback holds steady near 4-week tops across its main competitors.


Gold: Yellow Metal under pressure below 1,280.00 resistance

Gold technical analysis: Yellow Metal under pressure below 1,280.00 resistance. The yellow metal is trading below its main SMAs suggesting bearish momentum in the medium term.

Gold News

FOMC Minutes April 30-May 1: Patience reaffirmed

The Federal Reserve governors reaffirmed their “patient” rate policy in their meeting earlier this month noting that the hold would remain “for some time.” 

Read more