Policy minutes to provide Banxico’s evaluation of the economy

The Bank of Mexico kept policy rate unchanged at 3.0% at its April Board meeting, as expected. Moreover, the key messages on risks to growth and inflation scenarios remained largely unchanged compared with the previous statement. 

In particular, the bank reiterated its view on the downside risks to growth from external factors - including the possibility of deterioration in financial conditions - and the balance of risk to inflation from pesodepreciation (upside risk), labour market changes and the additional decline in telecom/energyprices (downside risk). 
The critical part is that these assessments have not changed meaningfully since the last Board meeting. Finally, it was also considered important to keep monetary policy aligned with that of the Federal Reserve. 

"Although, the bank's view on growth a bit too dovish even after taking into account softer industrial production/exports numbers recently, there is indeed no urgency to consider a rate hike in the near term given the possibility that core inflation could stay lower than the target through this year", says Societe General. 

Inflation remains well anchored for now despite pressure on the peso, and the Fed's stance is expected to remain considerably accommodative even if it raises rates a couple of times this year.