Banxico could follow the Fed when facing uncertainty

As hinted at by Deputy Governor Javier Guzman in a recent communication, the extent of additional pressure on the MXN and its ultimate impact on inflation remains a grey area, and Banxico could be forced to follow Fed actions closely in light of this uncertainty.

Banxico could opt to pre-empt potential volatility and its impact on the MXN rather than wait to see its impact on the domestic economy (prices in particular). Accordingly, Banxicohas revised its policy meeting dates so that they come soon after FOMC meetings. 

The first Fed rate hike is expected at the September meeting. A change of thought within Banxico, therefore, presents upside risk to our call for a first rate hike in Mexico in Q1 16. Thus, the first rate hike could come earlier if the expectations on US are realised, says Societe Generale.