MEXICO: Itaú Now See Policy Rate Reaching 7.50% This Year
Apr-16 15:00
- Amid heightened uncertainty, Itaú have revised their 2025 GDP forecast downward for the third consecutive month, now predicting a full recession with a 0.5% contraction in GDP this year, compared to zero growth in their previous macro scenario. For 2026, they expect a modest recovery, with GDP growth bouncing back to 0.5% (vs. +1.4% previously).
- They still see inflation ending this year at 3.9% and 2026 at 3.6%. While the disinflationary trend should be supported by weaker economic activity, they remain cautious as it has been volatile items that have contributed to taking inflation below the ceiling of Banxico’s target range.
- They expect Banxico to cut the interest rate by 50bp again in May, following the current forward guidance. Provided that USDMXN remains stable, and activity data stays weak, Banxico should not face any obstacles in delivering an additional cut of the same magnitude in June. Itaú now sees the policy rate reaching 7.5% this year and 7.0% in 2026, 100bp below their previous forecasts.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
OAT: Ratings Relief & Equity Bid Promotes Spread Tightening
Mar-17 14:59
OATS continue to benefit from ratings relief, with further tailwinds coming via the uptick in equities.
- That has outweighed domestic political tensions after PM Bayrou chose not to revert the retirement age to 62 from 64. Also note that this choice increases Bayrou’s fiscal credibility, countering at least some of the political risk.
- 10s struggling to break below 67bp vs. Bunds.
- As noted earlier, further downside traction in the 10-Year OAT/Bund spread would generate the lowest close since July ’24, with next support located at ~63bp, the 61.8 retracement of the June-Dec ’24 widening, followed by the July ’24 closing low at 62.7bp.
- Citi note that Friday’s affirmation from Fitch (AA-; Outlook Negative) “kept the onus on fiscal consolidation. The risks ahead come from Fitch’s lower-than-consensus deficit forecast of 5.4%/GDP in ‘25 and view that any defence spending increase will be funded by spending cuts. Still, this eliminates near-term rating risk, unless pension reform is reversed in the coming quarters. While other risks lurk for OATs (including the court verdict on Le Pen and pension reform negotiation deadline in April), the market is likely to wait for these to manifest before building up any fresh shorts”.
NZD: NZDUSD is extending gains through 0.5800
Mar-17 14:53
- The NZDUSD is close to 1% up on the day (0.92%), the cross is attempting to clear the 0.5800 figure, so far printing a 0.5803 high, best level since mid December.
- A small resistance is seen at 0.5818, the 12th December high, while better will be seen at 0.5846, the 38.2% retracement of the October/February range.
MNI EXCLUSIVE: The EU is moving towards approving plan for defence loans
Mar-17 14:44
The EU is moving towards approving a EUR150 billion plan for defence loans. -On MNI Policy MainWire now, for more details please contact sales@marketnews.com
