Mexico’s central bank (Banxico) will meet next week to decide on its interest rate. Economists at Commerzbank analyze MXN outlook.
Banxico will maintain its hawkish stance
Banxico’s cautious stance to date and the Fed’s ‘higher for longer’ outlook suggest that Banxico will maintain its hawkish stance for the time being.
After all, the Mexican economic outlook should also benefit from the improved chances of a soft landing in the US, and further upside risks to inflation could arise from the government’s more expansionary spending plans in the upcoming election year. In our view, this all points to continued MXN strength for the time being.