MXN

Although core inflation remains stubbornly elevated in both the US and Mexico, the signs of an eventual decline are clearly evident. Inflation is rolling over. Core Consumer Price, % Annual Change The Federal Reserve is on the verge of pausing – and ending – its rate hikes. This is impacting expectations for the Banco de Mexico. Monetary tightening cycles are ending. Cumulative change in Federal Funds Rate since initial increase, % Central bankers in both countries are closely aligned on the need for a “higher for longer” policy stance – and although markets are pricing in modest cuts in the...

Demand expectations are falling as evidence of a slowdown in the global industrial cycle accumulates – with China leading the way. Oil prices are dropping. Crude oil benchmarks, USD per barrel New York Federal Reserve Consumer Expectations Survey: “Inflation expectations declined to 4.1 percent at the one-year-ahead horizon, its lowest reading since May 2021, but increased slightly to 3.0 percent and 2.7 percent at the three- and five-year-ahead horizons”. Consumer inflation expectations are coming down. Google search volume for “inflation” and median one-year ahead expected inflation rate, % Inflation breakevens – which measure the difference between Treasury yields and Treasury...