Banxico (CB) modifies meeting schedule for second-half of year

The Mexican peso outperformed most regional currencies yesterday but still ended the day losing ground vs. the USD (around 0.3%) closing at USD-MXN 15.78. Banxico (Central Bank of Mexico) announced yesterday via a press release that the rate-setting meeting schedule for the second half of the year has been modified. The new schedule has been designed to incorporate all information available up to that point with respect to a potential US Fed action. 

The fact that now Banxico will be making its own decisions right after the US Fed has met suggests that Mexico is fine tuning its strategy (and timing) to follow an eventual rate hike in the US. In essence this is not news as Banxico has been explicitly linking its domestic monetary conditions to those of the US, but it affirms Banxico's intentions of designing a reaction function and fine tuning the timing around it. 

Before the new calendar was released, analysts thought that if the US Fed made a move in its September meeting, then Banxico would equalize its monetary stance in its next meeting (October), but given the new schedule, it may react as soon as September 21.

"Banxico seeks to minimize any disruption in financial markets by unnecessarily delaying a rate hike because of schedule rigidities, with this measure effectively helping to prevent such action. This should be good news for the MXN as there would not be long lasting gaps in US-Mexico interest rate differentials", states Commerzbank.