- The board of the Mexico Central Bank was unanimous on the decision to leave the benchmark interest rate unchanged at 11.25 percent.
- In order to achieve an orderly and sustained convergence of headline inflation to the 3% target, the Central Bank considers it necessary to maintain the reference rate at its current level for an extended period.
- The balance of risks for the trajectory of inflation within the forecast horizon is considered to be biased to the upside.
- The Central Bank continues to project that inflation will converge to the 3% target by the fourth quarter of 2024.
- Despite a complex external environment, economic activity in Mexico has demonstrated resilience. The labor market remains strong, and the balance of risks to growth is perceived as balanced.
- Headline inflation forecasts have been marginally revised downwards for some quarters, while core inflation projections have remained practically unchanged.
- The Central Bank anticipates a complicated and uncertain inflationary outlook throughout the entire forecast horizon, associated with upward risks.
- For the fourth quarter of 2023, Mexico's Central Bank forecasts average annual headline inflation of 4.6%, with core inflation at 5%.
- The Central Bank is committed to thoroughly monitoring inflationary pressures and all other factors that impact the foreseen path for inflation and its expectations.
Deputy Governor Heath of Mexico Central Bank asserts that
- The Bank will take necessary measures to bring inflation to its 3% target.
- Guidance is to hold the rate at 11.25% for a prolonged period.
Looking at the USDMXN, it has been trending lower until reaching a bottom on Friday of last week. This week has seen up-and-down correction. That has allowed the 100/200 hour MAs to catch up to the price. The pair has been trading above and below those MAs over the last 2-3 trading days.
The current price is just above the 200-hour MA at 17.16305 (at 17.1644). Stay above that MA and the lower 100-hour MA at 17.1314 gives the buyers some hope. Move below those levels and the sellers are back in full control.
There is room to roam higher. The high from yesterday and June 15 comes in around the 17.2517 area (see red numbered circles on the chart below). Getting above that level, and it opens the door for more upside potential with the 38.2% of the move down from the May 23 high at 17.3942 as a target (see chart below).
Move below the 100-hour MA, and the sellers will likely push to new lows in the pair.