The Mexican Peso is facing an exciting day today. Economists at Commerzbank analyze MXN outlook.
Monthly inflation data Banxico’s monetary policy decision in focus
The future development of inflation rates is likely to be decisive for the start of the rate cut cycle. If core inflation comes in below expectations and if Banxico’s projections signal that the target will be reached soon the market is likely to take an optimistic view about rate cuts. Conversely, any signs of stubborn inflation rates will make unchanged interest rates over a longer period more likely, which should benefit the Peso.
In view of Mexico’s political issues, in particular considering the elections next year and the fact that the delay of the rate cut expectations did not have much of an effect on the Peso recently, the positive effect is likely to be limited though.
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