According to the Goldman Sachs analysts, the Mexican central bank РBanxico (Banco de M̩xico) is seen cutting the benchmark interest rates in September, in the wake of the US-Mexico trade deal and a weak economic situation.
Key Quotes:
“Monetary policy in Mexico is was “way too tight”.
A cut could come without much warning, not going to be preparing the ground over two or three meetings, possibly as early as September.
A rate cut needed as the economy is underperforming, the output gap is widening and amid signs of a damaged jobs market.
A positive is a demand, no cut needed to boost demand
Deal with the US adds costs for Mexico:
- border protection.
- housing and feeding asylum seekers.
- potential political cost.”
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