Mexico: Banxico cuts 50bps – TDS

Banxico's actions indicate that further cuts of 50bps are in the pipeline, in the opinion of economists at TD Securities. USD/MXN is trading at 24.2805.

Key quotes

“Likely in response to the recent collapse in oil prices, Banxico has acted inter-meeting with a surprise 50bp rate cut, bringing the overnight rate to 6.00%.”

“It is important to note that the decision was unanimous, a dovish shift from the previous surprise decision, and suggests that further easing at a trajectory of 50bps per meeting is likely.”

“We expect a 50bp cut in May and 50bps for the following three meetings.” 

“Banxico estimates that growth could contract by more than 5% in Q1, which we see as more optimistic than our expectations of greater than 7% in Q1.”