Today’s Banxico Decision: Is Time Running Out?

Naturally, this won’t be explicit. So, we will likely understand it through any potential change in the bank’s outlook.

What to look out for

The latest survey of economists expects inflation to be at 4.7% by the end of the year. Remember that the Banxico targets between 2-4%.

This isn’t all that different from the latest projections from the central bank at their last meeting for 4.6%.

If Banxico keeps its expectations for inflation the same, the market might take it as an indication that a rate hike is still pretty far off. Therefore, this will weaken the peso a bit.

On the other hand, traders could see a further rise in the expectations of inflation (say, at or near 5.0%) as a clear sign they are getting ready to raise rates in the next couple of months. Therefore, this would push the peso higher.

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