USD/MXN: TARGETING 16.50 IN 6-9 MONTHS BASED ON VIEW FOR FED CUTS IN 2024 AND DOMESTIC DISINFLATION – SOCGEN
Economists at Société Générale analyze Mexican Peso’s outlook ahead of the Banxico rate decision.
Banxico forecast to stand pat
Banxico is forecast to keep rates on hold today shortly after the release of inflation data for October. Headline CPI likely slowed further to 4.25% YoY in October.
We expect the central bank to extend the pause and reiterate that rates need to stay at current levels for a prolonged period to achieve a sustained and orderly convergence of headline inflation on the 3% target.
We are tactically short USD/MXN, targeting 16.50 in 6-9 months based on our house view for Fed cuts in 2024 and domestic disinflation.
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