Banxico likely to hold back, awaiting the Fed’s move

The Banco de México's (Banxico's) board of governors decides on monetary policyon Thursday 30 April. Markets expect the board to leave the policy rate unchanged at 3.0%. 

In its 26 March meeting, Banxico expressed an overall neutral tone, although it acknowledged weak activity. Banxico sees a benign inflation outlook, with inflation expectations still well anchored, and has made clear that US monetary policy will play a strong role in its monetary policy decision. 

Since the March meeting economic data for Mexico has brought a slightly disappointingQ4-2014 GDP reading, but better figures for Q1. For instance, February retail salesgrew 5.6% y/y, much stronger than the consensus expectation of 4.5%. 

According to Standard Chartered, Banxico is likely to maintain its neutral tone, continuing to highlight the Fed's rate-hike timing as a reference for beginning its own policy-hiking cycle.