Mexico's central bank deputy governor, Heath, indicated that the bank should not cut rates again in the short term, and that additional easing could come about a year later. This highlights policymakers' cautious stance even as inflation approaches its target. In an interview released on Banorte's podcast, Heath said, "I think it's appropriate to pause under current circumstances." He added that if inflation, supported by core inflation, gets very close to the bank's 3% target, there would then be room to consider lowering rates a bit more, and that could be about a year from now. He warned that the decline in headline inflation is mainly due to volatile non-core items that are less responsive to monetary policy, and it is too early to declare victory. He also suggested that if inflation reignites, progress stalls, or the external environment, including the Federal Reserve's actions, complicates the outlook, the bank could be forced to reassess its stance.
Deputy governor signals no immediate rate cuts, supporting higher yields.
Hawkish stance supports MXN, strengthening it against USD.
