MEXICO: Banorte Expecting Front-Loaded Easing, But Higher Terminal Rate
Dec-27 17:15
- Considering Banxico’s December rate cut, the statement’s tone, Banorte’s views on inflation and economic activity, as well as a Board that could be more dovish, Banorte believe the central bank will extend the easing cycle. Nevertheless, a limiting factor for the terminal level will be the Fed’s more cautious stance, as well as other challenges in the external front.
- The perception of external risks keeps evolving. This time around, they highlighted the potential effects from US tariffs to Mexican exports, added as one driver that could skew inflation higher.
- All in all, Banorte keep expecting accumulated rate cuts of 200bps in FY2025, with the reference rate closing the period at 8.00%. This would be their new level for the terminal rate, higher than previously forecasted. Banorte anticipate a 25bp cut in February, although also incorporating 50bp adjustments across several moments in the year.
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