Mexico City.- The Bank of Mexico (Banxico) will leave its interest rate unchanged and it is expected that the message given tomorrow in its monetary policy decision will not be clear about the following movements, estimate analysts at Bank of America (BofA).
According to the financial institution, Banxico faces a rather complex scenario because on the one hand the economy has slowed down, but inflation is still at 5.5 percent and with the possibility of rising, levels far from the 3 percent target.
Moreover, the peso has depreciated since the last monetary policy decision in July and is facing a highly volatile environment. These aspects could encourage the rate to remain unchanged.
On the other hand, the analysis warns that the Mexican economy has slowed down, underlying inflation has decreased, a scenario to which the possible reduction of rates by the Fed is added.
Despite these last elements, Bank of America believes that the Central Bank will leave its rate unchanged.
“We believe it is very likely that Banxico will leave its rate unchanged, but we do not expect it to send a clear message regarding future monetary policy actions. For the end of 2024, we expect the rate to be at 10.75 percent and at 8.50 percent at the end of 2025,” the report states.
The decision, according to BofA, will be complex and it could be seen tomorrow that the decision to leave the rate unchanged will be made with the vote of four of the five members that make up the Governing Board.
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