The Bank of Mexico is likely to stand pat during its board meeting on Thursday, said Societe Generale in a research note. The central bank, during its meeting in June had tightened the policy more than expected due to peso’s depreciation, hiking the overnight rate to 4.25 percent. It brought the spread with the US Fed funds rate to 3.75 percent. The present level of the policy rate spread is therefore the same as the average spread since 2005.

The Mexican central bank has mentioned quite a number of times earlier that it would like to maintain its policy stance consistent with the US Fed’s action. July’s meeting minutes imply that the FOMC is expected to maintain the policy rate in 2016 in spite of edging back to balance.

Given that the growth outlook is expected to moderate and the outlook of inflation continues to be steady, the Bank of Mexico is likely to keep the policy rate on hold at current levels for now unless the US Fed provides a clear signal of further tightening, stated Societe Generale.

“We believe that unless the peso depreciation magnifies further, inflationary pressure will be contained enough to allow Banxico to continue with the current level of policy accommodation through this year”, added Societe Generale.

Overall, the Banxico’s prospect of additional tightening depends totally on the US Fed’s stance and the peso in the near to medium term.