Banxico's Rate Cut is hotter than ever...

Banxico's dovish tone was helped by the fact that inflation, which had crept up for most of 2012, surprised on the downside at the end of the year, finishing below the bank’s 4 per cent ceiling.  Core inflation in December hit an all-time low of 2.9 per cent drive by the stabilisation in raw materials prices combined with a stronger Peso and lower telecommunications rates. The Central Bank also acknowledged that growth in Mexico was also slowing after an impressive three years, with the heady growth rates seen in the country’s export sector calming somewhat. December IGAE printed a 1.42% below market expectations and prior data. Yet almost 80 per cent of total exports still go the US and exports represent more than 30 per cent of the Mexican GDP any lower data coming from US would be driving Mex Local Markets. Several Market Dealers are expecting a one off 50bp rate cut in the next meeting (March 8).