Banxico interest rate decision on 21.06.2018
- prior 7.50%
- Decision unanimous
- Balance of risks to growth retains a downside bias
- Certain risks to higher inflation have started to materialise which could take inflation to the goal
- Vigilant on relative monetary policy stance with US and output gap
- Peso could appreciate if Nafta negotiations turn out favourable
- Risk in convergence to reach 3% target on inflation will be slower than anticipated
- Impact of US and Mexican tit-for-tat tariffs on inflation will be limited and of short duration
- Further depreciation in exchange rate and pressures on fuel and gas prices would affect downward inflation trend
- Board will quickly and firmly act to factors that imply a risk to prices and inflation expectations
USDMXN going into the decision around 20.31. Comes out a tad weaker towards 10.28.
Everything more or less as expected, neutral but cautious. Not letting vigilance go into the elections and Nafta negotiations.