Banxico announced its latest rate decision on Thursday, March 21, when it decided to cut rates for the first time since 2021.
USD/MXN barely moved on the decision. Economists at Rabobank analyze the pair’s outlook. Support at 16.60 to hold Banxico cut the overnight policy rate 25 bps to 11.00% on Thursday, March 21. The decision revealed a 4 to 1 split with Irene Espinosa dissenting in favor of a no-change decision. The accompanying inflation forecasts were largely unchanged except for a 0.
1ppt upward revision to the 2024 headline CPI forecast which was raised from 3.5% to 3.6%. Inflation up, rates down. Our forecast for the end of year policy rate is unchanged at 9.50% as we are now assuming 25 bps cuts at every meeting; previously, we had expected a pick up to 50 bps clips in Q4. USD/MXN hardly moved in response to the decision given it was largely priced in. We continue to see 16.
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