After knowing the monetary policy announcement of the Bank of Mexicofinancial strategists consider that the door was left open for an increase of 75 basis points in the rate in one of the four meetings scheduled for this year.
According to economists from Finamex brokerage house and Monex Financial Group the rate may remain at 8.50 points at the end of the year, with which we would have a restrictive position.
But the risk generated by inflationary pressures is upwards and they do not rule out that the Governing Board raise the rate above 9 percent.
In fact, Pamela Díaz Loubet, economist for Mexico in BNP Paribas It has the punctual projection that the reference rate will remain at a historical 9.50 percent.
The more aggressive vote of deputy governor Irene Espinosa and the announcement that they will take more forceful measures to combat inflation feed these expectations about the rate, argued the chief economist of Finamex, Casa de Bolsa, Jessica Roldán.
“Without a doubt, the door was left open for more aggressive increases of three-quarters of a point to be presented in the future,” he stressed.
The deputy director of economic analysis at Monex, Janneth Quiroz, explained that the tone of the statement is hawkish, that in monetary language it is restrictive and less tolerant to inflation.
turn in strategy
The BNP Paribas economist considers that with this decision, the Bank of Mexico took a turn in the monetary policy strategy.
They went from a gradual resolution and according to the economic data released, to a more forceful one regarding the inflation trend, he observed.
He described the communication used in the statement as excellent, especially with regard to the trajectory of the rate in the United States.
“Before this announcement, the Bank of Mexico said that they would be attentive to the position relative to the United States and now I think it is very well executed because it distances itself from the Fed in a positive way. It puts at the forefront what happens with inflation in Mexico and it is key because it thus provides flexibility to rise more or end the cycle before the Fed if necessary.
restrictive position
The Monex expert maintains that with this decision by the Bank of Mexico, which left the rate at 7%, the monetary position is restrictive.
It is true that the interbank funding rate remains at levels not seen since August 2017, he stated. But at that time inflation was running at 6.6% per year.
Current inflation is much higher, at 7.7% at an annual rate, which shows that the upward cycle has not ended, he said.
Regarding the market’s reaction, which he says remained lateral, it reflects that, although the increase was discounted, we had more information in the statement that suggests that monetary policy will continue to be restricted.
without kicking convergence
The Finamex strategist highlighted that despite the change in inflation forecasts, the Bank of Mexico “did not kick the convergence date.”
According to the forecasts disclosed in the statement, it will be the first quarter of 2024 when inflation will register a variation of 3.1%, which would be within the specific objective of the central bank. A projection that remains unchanged since the March announcement.
What this projection tells us is that they will maintain monetary policy in such a position that it will allow them to reach the objective in the same period estimated in March, he stressed. This also reinforces their perception that the position will remain tight.