Connect with us

Hi, what are you looking for?

Daily Market SolutionDaily Market Solution

Investing

Banxico to cut by 25 bps- analyst

Bank of America projects that the Bank of Mexico (Banxico) would reduce its policy rate by 25 basis points, bringing it down to 10.00% at the upcoming meeting on December 19.

The financial institution anticipates a divided decision, with at least one member likely to push for a more aggressive 50 basis point reduction. Furthermore, Bank of America foresees new forward guidance from Banxico, suggesting the possibility of an accelerated pace of rate cuts.

Banxico has previously indicated in its November forward guidance that it plans to lower rates in subsequent meetings. The rationale behind the expected rate cuts includes core inflation remaining under 4%, a sluggish economy despite an unexpected growth in third-quarter GDP, and the U.S. Federal Reserve’s own rate-cutting measures.

Despite these factors, challenges such as headline inflation hovering around 5%, close to 5% services inflation, a tight labor market, a weakening Mexican peso, and uncertainties surrounding domestic reforms and U.S. policies under President-elect Donald Trump, create a complex backdrop for monetary policy decisions.

Moreover, inflation expectations are still above the 3.0% target, which adds to the caution exercised by Banxico. With these considerations in mind, Bank of America predicts a gradual but consistent reduction in the policy rate for the remainder of this year and into the early part of the next, aiming for a rate of 8.75%.

However, there remains a risk that Banxico may opt for a more rapid pace, potentially enacting 50 basis point cuts as soon as December and possibly cutting rates more deeply than Bank of America currently expects.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

This post appeared first on investing.com







    You May Also Like

    Editor's Pick

    Extremist supporters of former president Donald Trump are lashing out online against Usha Vance, the wife of Trump’s running mate, Sen. J.D. Vance (R-Ohio),...

    Investing

    Overview Energy Fuels (TSX:EFR,NYSE:UUUU) has been the largest producer of uranium in the United States and an emerging producer of rare earth elements (REEs)....

    Investing

    Investor Insight Silver prices breached $30/oz in the second half of May 2024 as investor demand drove prices to their highest in more than...

    Investing

    Overview Flynn Gold Limited (ASX: FG1) is an Australian mineral exploration company with a portfolio of projects in Tasmania and Western Australia. Tasmania is...

    Disclaimer: Dailymarketsolution.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


    Copyright © 2024 dailymarketsolution.com