1、TRADE IDEAThe market is already pricing around 40bp of rate cutsuntil the end of this year and 95bp until the end of nextyear.OurstrategyteamexpectsBanxicotobecomemoredovishamidstglobalgrowthdeceleration and the dovish stance of core centralbanks.This should benefit short-term Mexican rates,inour vi
2、ew.Our economists are calling for 50bp cuts untilthe end of this year and a 150bp cut for the wholecycle.We remain positioned in Mexican rates through1y1y TIIE and 10y TIIE receivers.MARKET ECONOMICS|EM STRATEGY|EM ECONOMICSKEY MESSAGESMexicos central bank on Thursday unanimouslyagreed to keep its r
3、eference rate at 8.25%.Banxicos overall tone did not depart much fromthat in February,although we did see hawkishfactors dominate dovish ones.However,we thinkthis is a central bank that wants to deliver a ratherbalanced tone at this point.We reiterate our call for no monetary policy ratecuts until Q
4、4 as the list of inflation risks linked toevolving trends and events is still long.FLASH|LATAM28 March 2019Banxico on Thursday unanimously agreed to keeprates on hold,as widely expected.Overall,thecentralbankstonedidnotdepartmuchfromFebruary,althoughwedidseehawkishfactorsdominate dovish ones(see Fig
5、.1 for BNPPs Banxicotone tracker).However,we think the intention of theBoard is to offer a balanced rhetoric.We think the central bank continues to be careful notto trigger rate cut expectations in the short-term,whileuncertainty remains at elevated levels.While the list of upside and downside infla
6、tionary riskshas remained the same as in the Q1 Quarterly Reportoverall tilted to the downside,we draw attention tothe fact that Banxico has highlighted that some of thefavourable shocks that had pushed non-core inflationlower have begun to revert.In contrast,the balance ofactivity has remained tilt
7、ed to the upside,with noexplicit further deterioration.We reiterate our call for no rate cut to be deliveredin H1 against the backdrop of a rather long list ofupside inflation risks(see Mexico reality check:2019outlook update).We still expect Banxico to cut,butnot before Q4,when a wider(negative)out
8、put gapalong with hints of a gradual downtrend in coreinflation may make conditions more favourable forBanxico to begin its normalization cycle.Please refer to important information and MAR disclosures at the end of this reportMexico:No Banxico rate cuts around the cornerFig.2:BNPPs Banxico Policy T
9、rackerSources:Banxico,BNP Paribas.Note:Each line in the communiqu is classified into three groups according to its implications and plotted in%of total lines.1|FLASHJoel Virgen Rojano,Mexico Economist|BNP Paribas Securities Corp.Andre Digiacomo,FX&IR Latin America Strategy|Banco BNP Paribas Brasil S
10、A.6.757.007.257.507.758.008.258.500102030405060708090100JunAugSepNovDecFebAprMayJunAugOctNovDecFebMarHawkishNeutralDovishPolicy rate(RHS)201720182019Legal NoticeThis document has been written by our Strategist and Economist teams within the BNP Paribas group of companies(collectively“BNPP”);itdoes n
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