Mexico Leaves Rate Untouched

Mexico’s central bank left its rate unchanged at 4.50%, as expected by the market. “The post-meeting communiqué remains neutral and we reiterate our call that the first rate hike will be in Q1 2012,” says Nomura. Goldman Sachs meanwhile says that “as the output gap shifts to above neutral by mid-year and base effects raise the yoy inflation rate from mid-2011 onward, we believe that Banxico will initiate a tightening cycle in October, raising the rate 4 times by 25bp per meeting to 5.5% in March. Thereafter, Banxico will keep the rate unchanged at 5.5%.”