Banxico Preview: Another hike coming - Rabobank

Analysts at Rabobank expect Banxico to raise the Mexican policy rate 25bp to 7.50% on Thursday, February 8th.

Key Quotes

“The front-end of the MXN curve points to around an 83% chance of a hike and 18 of the 21 analysts surveyed by Bloomberg are forecasting a 25bp move.”

“CPI inflation has started to come down in earnest but MXN support remains reliant on attractive carry stemming from high interest rates and there is a significant risk that Banxico may raise rates further in the face of a sharp MXN sell-off.”

“We still see NAFTA negotiations as a potential trigger for MXN selling but the Mexican Presidential elections will become increasingly important as campaigning starts to pick-up substantially in March.”