Connect with us


“Bank of Mexico, forced to raise the rate by the same magnitude” & More Latest News Here


Banco de México (Banxico) will raise the funding rate by three-quarters of a point at its meeting next Thursday, just as the United States has done, strategists from Franklin Templeton investment funds and BWC Capital agreed.

In Banxico’s Governing Board they are clear that they cannot reduce the rate differential because it would generate a disorderly depreciation of the peso, argued the investment vice president at Franklin Templeton, Luis Gonzali.

He made reference to Deputy Governor Jonathan Heath’s speech at the Mexican Association of the Automotive Industry (AMIA) to explain that the restrictive stance will help contain inflation expectations and by following the same path as the Fed in rate hikes, deterioration will be avoided. in the price of the peso, which has limited the possibility of creating additional pressure on inflation.

Gonzali noted that the US central banker also mentioned that a bit of luck is required for inflation shocks to be reduced. It’s funny that he talks about luck when he’s presenting a strategy to reduce inflation, he said.

At Franklin Templeton they estimate that Mexico’s reference rate will end the year between 9.75 and 10.25%, a range that implies a difference from the range of 9.5 to 10% that they forecast before the Fed’s announcement.

Besides, the director of Analysis at Black WallStreet Capital (BWC), Jacobo Rodríguez, agrees in estimating that Banxico must increase rates by the same magnitude as the Fed between now and the end of the year and even next.

But remember that Mexico began the upward cycle before, which gives it a certain advantage to be able to pause, once it is also identified that the internal inflationary pressure is reversing.

At BWC they estimate that the reference rate will end the year at 9.25% and that at the end of the cycle it will be at 10.50%, which is expected to occur in the first half of 2023.

Fed hawkish, negative rate

For strategists, the decision of the Federal Open Market Committee of the Fed (FOMC) was discounted. What did surprise the market were revised expectations, particularly for GDP.

Rodríguez highlighted that the Fed’s forecast for this year’s GDP went from 1.75 to 0.2%, which implicitly indicates that they are willing to take the economy where it is necessary to reduce the pressure of demand on inflation.

“And whatever is necessary also goes through a recession,” he clarified.

Gonzali clarified that the United States economy has registered a negative performance in the first half of the year, taking away strength from the dynamism and recalled what President Powell said at the press conference, noting that the US partners are also in a phase slowdown that does not encourage exports.

The tone of the Fed’s speech is hawkish, Rodríguez stressed, although the rate is still in a neutral phase, if we take into account that average inflation will be 5.4% and the year-end rate will be 4.5%, the spread remains negative and therefore do not have a restrictive rate.

The President of the Fed admitted that it is necessary to further increase the yield to take it to a restrictive terrain.

target inflation

Gonzali ruled out that the FOMC’s projection of the specific inflation target to be reached in 2025 is a factor of concern.

Let’s remember that the risk at some point was that US inflation could reach double digits. The Committee’s forecast is that it will be at 2.8% in 2023, which implies that it will be closer to the objective”, he concluded.

[email protected]

“Bank of Mexico, forced to raise the rate by the same magnitude”
& Latest News Update

I have tried to give all kinds of news to all of you latest news today 2022 through this website and you are going to like all this news very much because all the news we always give in this news is always there. It is on trending topic and whatever the latest news was

it was always our effort to reach you that you keep getting the Electricity News, Degree News, Donate News, Bitcoin News, Trading News, Real Estate News, Gaming News, Trending News, Digital Marketing, Telecom News, Beauty News, Banking News, Travel News, Health News, Cryptocurrency News, Claim News latest news and you always keep getting the information of news through us for free and also tell you people. Give that whatever information related to other types of news will be

“Bank of Mexico, forced to raise the rate by the same magnitude”
& More Live News

All this news that I have made and shared for you people, you will like it very much and in it we keep bringing topics for you people like every time so that you keep getting news information like trending topics and you It is our goal to be able to get

all kinds of news without going through us so that we can reach you the latest and best news for free so that you can move ahead further by getting the information of that news together with you. Later on, we will continue

to give information about more today world news update types of latest news through posts on our website so that you always keep moving forward in that news and whatever kind of information will be there, it will definitely be conveyed to you people.

“Bank of Mexico, forced to raise the rate by the same magnitude”
& More News Today

All this news that I have brought up to you or will be the most different and best news that you people are not going to get anywhere, along with the information Trending News, Breaking News, Health News, Science News, Sports News, Entertainment News, Technology News, Business News, World News of this made available to all of you so that you are always connected with the news, stay ahead in the matter and keep getting today news all types of news for free till today so that you can get the news by getting it. Always take two steps forward

Credit Goes To News Website – This Original Content Owner News Website . This Is Not My Content So If You Want To Read Original Content You Can Follow Below Links

Get Original Links Here🡽

Click to comment