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Investing.com - Bank of America expects Mexico’s central bank, Banxico, to cut its policy rate by 25 basis points at its upcoming August 7 meeting, lowering the rate to 7.75%.
The financial institution anticipates the decision will likely be split, with four members of Banxico’s monetary policy committee voting in favor of the cut and one against it, according to a recent research note.
BofA predicts Banxico will maintain its current forward guidance following the rate decision, leaving open the possibility of another potential rate cut during its September meeting.
The bank’s baseline scenario suggests Banxico will pause its easing cycle after this August cut, though it acknowledges there are risks to this forecast.
The primary risk to BofA’s outlook is that Banxico could implement another rate cut in September before pausing its monetary easing cycle, rather than pausing immediately after the August reduction.
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