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8 May 2015
Banxico could hike in October – Scotiabank
FXStreet (Edinburgh) - Eduardo Suarez, Chief FX Strategist at Scotiabank, believes the Mexican central bank could hike in October as long as the Fed’s hike comes in September.
Key Quotes
“Our bank base case is that the Fed’s lift‐off is September 2015, which we think means that Banxico’s first hike is likely to be a rate rise of +25bps in the meeting right after that (October—although our economics team believes we will have a +50bps hike in September), with the FX Commission potentially taking measures to shore up the peso’s liquidity heading into the FOMC meeting if necessary. This is a view we have high conviction on”.
“The FX Commission has 3 members from the FinMin & 3 from Banxico, with the tie‐breaker going to the FinMin, but with a decision needing votes from both institutions, giving Banxico a de‐ facto veto”.
Key Quotes
“Our bank base case is that the Fed’s lift‐off is September 2015, which we think means that Banxico’s first hike is likely to be a rate rise of +25bps in the meeting right after that (October—although our economics team believes we will have a +50bps hike in September), with the FX Commission potentially taking measures to shore up the peso’s liquidity heading into the FOMC meeting if necessary. This is a view we have high conviction on”.
“The FX Commission has 3 members from the FinMin & 3 from Banxico, with the tie‐breaker going to the FinMin, but with a decision needing votes from both institutions, giving Banxico a de‐ facto veto”.