Analysts foresee long-term rate cuts as inflation creeps up

For the 4th consecutive month, backstage assemblage analysts person raised their expectations for economical maturation successful Mexico this year, portion reducing their year-end ostentation estimates for the 3rd consecutive month.

The results of the monthly survey conducted by the Bank of Mexico (Banxico) bespeak the cardinal slope is expected to proceed the monetary easing argumentation that has seen the Board of Governors little the benchmark involvement complaint astatine 10 meetings successful a row. 

The backstage analysts’ predictions came retired successful a survey by Mexico’s cardinal slope successful which 45 salient Mexican expert groups and consulting firms provided their insights. (Banxico)

The 45 nationalist and planetary private-sector economical investigation groups and consulting firms that participated successful the survey projected Mexico’s year-end maturation successful GDP to beryllium 0.53%, up from 0.46% predicted successful August. The survey had estimated backmost successful May that 2025 would extremity with lone 0.18% growth. 

At the aforesaid time, these experts expect GDP maturation of 1.33% for adjacent twelvemonth — somewhat little than the 1.34% they projected past period and good beneath the 1.75% they expected successful January.

Regarding user prices, the survey sees ostentation reaching 3.85% by year-end, a downward accommodation from the 3.95% estimated successful the August survey, and beneath Banxico’s ain 4% projection. 

However, September survey projections surpass the 3.74% people registered during the archetypal 2 weeks of September, which itself was supra the 3.57% summation seen successful August.

While Banxico expects ostentation to converge toward its target of 3% by the third-quarter of 2026, those surveyed don’t expect a akin reduction. Instead, the analysts task ostentation volition registry a saltation of 3.80% successful 2026 and 3.71% successful 2027.

Still, the paper El Economista reported that “the anticipated discourse for ostentation and maturation [as represented successful the survey] volition pb the Board of Governors to proceed its rhythm of cuts.”

In its astir caller gathering connected Sept. 25, Banxico reduced the overnight interbank involvement rate to 7.5%, its lowest level since May 2022.

The experts surveyed expect the benchmark complaint to extremity the twelvemonth astatine 7.14%, and expect the cardinal slope volition proceed its rate-cutting, lowering the complaint to 6.54 percent by year-end 2026.

Finally, the analysts’ perceptions of the existent economical situation were not bullish: 81% judge the system is nary amended than it was a twelvemonth ago; 16% expect the concern clime volition worsen; 25% judge it volition improve; and 59% judge it volition stay the same.

With reports from El Economista and Ovaciones