Mexico’s central bank (Banxico) is expected to lower its policy interest rate by 25 basis points to 7.50% during its upcoming meeting. The decision is driven by inflation data and strong economic fundamentals, according to FX analysts at BBH.
- Inflation Trend: Headline inflation was 3.57% in August and 3.51% in July, both below Banxico’s Q3 forecast of 3.8%. This supports the case for continued monetary easing.
- Previous Meeting: In the August 7 meeting, Banxico cut the rate by 25bps to 7.75%. The vote was 4-1, with one board member, Jonathan Heath, preferring to hold rates steady.
- MXN Outlook: The Mexican peso (MXN) remains supported by strong fundamentals, including:
- Positive real interest rates
- A balanced current account
- Robust net foreign direct investment (FDI) inflows
Banxico’s rate decision is scheduled for 3:00pm New York / 8:00pm London time.