Banxico keeps policy rate unchanged, maintains its neutral tone

Banxico kept its policy rate unchanged at 3.00% at today's meet. The press release maintains its neutral tone and the balance of risks remains unchanged. 

As expected, the press release acknowledges that inflation is below 3%, even after the MXN depreciation, and it highlights that inflation expectations are well anchored. In fact, the board expects that annual headline inflation will remain below 3% for the rest of the year. Finally, the balance of risks for growth is unchanged with respect to the previous meeting. 

"We think that the minutes will be crucial to confirm our belief that the board might be more confident about future inflation dynamics and expectations, suggesting a patient stance. Although we maintain our call that Banxico will react to an eventual Fed action, the fact that inflation will remain low for the rest of the year will provide time for the board to raise rates when inflation convergence is evidently at risk." says Barclays