Banxico will release inflation data for January today, and it is likely that it will continue with its rate hikes. The economists of commerzbank analyze how these events could affect the Mexican peso.
Banxico could surprise with a big rate hike
“A small increase in inflation rates could fuel market expectations that Banxico will take a small step in raising rates and sound aggressive, that is, leaving the door open for new increases. If, on the contrary, Banxico offers less , this is likely to cause disappointment and put pressure on the MXN.”
“A significant upside surprise to the inflation data could fuel expectations of a further rate hike from Banxico, which is likely to benefit the peso. It cannot be ruled out that Banxico will surprise with a big jump in rates, which will probably support the MXN.”
“The combination of a moderate increase in inflation, a small rate hike and a somewhat aggressive-sounding statement in which Banxico signals further interest rate hikes seems more likely to us. As this option appears to be already included in the prices, potential peso gains should be limited.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
