Banxico to maintain status quo on rates – Rabobank
Analysts at Rabobank suggest that Banxico is expected to leave the Mexican policy rate on hold at 7.50% on Thursday, April 12th.
Key Quotes
“MXN OIS point to around a 25% chance of a 25bp hike while Bloomberg’s survey of analysts shows only two of 20 are calling for a hike.”
“Price pressures are easing and activity data are slowing. Given that we have also seen MXN rally around 3.5% against USD since the last meeting on February 8th there is little motivation for Banxico to raise rates at this juncture.”
“Looking further out, there remains the risk that MXN may turn on a peso and head lower again should NAFTA negotiations fail or if the market takes a more negative view of the potential impact of the July 1stPresidential election. Should we see a very sharp depreciation of MXN then Banxico may choose to raise rates again to support the currency but failing that, we see the Bank as likely to leave rates on hold at the next few meetings.”