Mexican interest rates to fall by more than most expect - Capital Economics
Latin America Economics

Mexican interest rates to fall by more than most expect

Latin America Economics Focus
Written by Capital Economics Economist

Mexican inflation has been stubbornly above Banxico’s 2-4% target over the past two years, but we think it will fall back within this range by year-end. And with the Fed’s tightening cycle near its peak, we expect Banxico to shift into easing mode later this year. We’ve pencilled in 75bp of cuts this year and a further 100bp of reductions in 2020, taking the policy rate to 6.50% (from 8.25% now). These forecasts are well below the current market pricing.