MXN: Indications of monetary relaxation and a stable currency – Societe Generale

Banxico Hints at Potential for Interest Rate Reductions

According to Societe Generale analysts, Deputy Governor Galia Borja has indicated that Mexico’s central bank may have the flexibility to lower interest rates. This outlook is supported by subdued domestic consumption, decreased investment activity, and a stronger Peso.

Despite fresh concerns regarding the USMCA raised by USTR Greer and a drop in President Sheinbaum’s approval rating to 56%—her lowest since taking office—the Mexican Peso remained stable. The currency’s resilience persisted even as other high-yield and commodity-linked currencies, such as the ZAR, COP, CLP, and AUD, faced setbacks due to volatility in the tech sector.

On the economic data side, Mexico’s final fourth-quarter GDP growth was revised upward to 0.9% quarter-on-quarter (1.8% year-on-year), compared to previous estimates of 0.8% (1.6% year-on-year). Additionally, mid-February inflation edged up slightly to 3.92% from 3.82%.

(This report was produced with the assistance of artificial intelligence and subsequently reviewed by an editor.)