Archive

Mexico: Cautious Easing in Uncertain Times

• Banxico cut rates by 25bp to 7.25%, in line with the consensus. Guidance turned more cautious, with policymakers less committed to further easing soon.​
• The 4-1 vote (one dissent for a hold) underscores internal concern about persistent core inflation, which could constrain scope for additional rate cuts.​
• With GDP contracting and core prices sticky, future rate moves hinge on inflation's path and external risks. The pace of easing will likely slow from here.

Rebound To Resilience

• The diverging services PMI and ISM resolved bullishly in October, with activity broadly back to 2024 averages. The ISM headline still looks lower because it is a composite.
• Price balances remain extremely elevated while employment’s weakness has become less acute, skewing the trade-off more hawkishly for any policymaker’s preferences.
• The broader global deterioration in PMIs and unemployment last month also recovered in the latest round of releases. These data are not screaming for any more easing.

By Philip Rush

Swedish Rate Pause: Recovery Rising, Risks Remain

• The Riksbank left rates unchanged at 1.75%, matching consensus. Inflation is easing but is still above target, signalling little chance of cuts or hikes in the near term.​
• A weak labour market offset stronger-than-expected Q3 growth. Policymakers are watching household demand closely to assess the durability of the recovery before shifting rates.​
• Ongoing risks from geopolitics, trade, and fiscal policy keep the future rate path uncertain, with market pricing in steady rates through 2026 barring major shocks.

Brazil's Cautious Monetary Pause

• Brazil's Copom holds Selic at 15% as expected, but signals a very prolonged pause ahead with rates to stay elevated while inflation expectations remain deanchored above target.
• The committee emphasises that a contractionary policy is needed despite moderate growth, citing tariff risks, currency depreciation pass-through, and resilient labour market pressures.
• Rate hikes remain optionally available if inflation expectations fail to re-anchor, but markets now price March 2026 easing, contingent on fiscal discipline and external stability.