“Inflation expectations, a key constraint to policy easing in Mexico, are finally showing a propensity to ease, which potentially could have opened the door to cuts from Banxico late this year,” argued TD Securities analysts.
Key quotes
“However, April inflation data is showing certain uncomfortable developments after a constructive Q1, offsetting the rate-easing argument from slowing growth and easing inflation expectations.”
“We continue to see Q1 2020 as Banxico’s first opportunity to cut rates, but price developments over the course of the next few months will be key as to whether the easing in inflation expectations is not completely offset by a pickup in actual inflation.”
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