Raúl Ostos, general director of Barclays México, believes that the Bank of Mexico (Banxico) will act with great prudence. This is mainly because the world is uncertain, and the impact of higher oil prices will have a direct, first, second, and third-order effect on global inflation, which can clearly affect Mexico. The executive emphasized respect for the central bank's timeline and decisions. "Our reading is that they will wait and see," he said. During the 89th Banking Convention, Governor Victoria Rodríguez avoided signaling the path of monetary policy but mentioned the global risks represented by the war in Iran. Additionally, relevant announcements included measures to contain gasoline prices amid the rise in the Mexican oil mix, which is already around $100 per barrel due to the blockade in the Strait of Hormuz. The situation in Iran occupied space in the reflections at this year's banking meeting. Three weeks into the conflict, there are no clear signs of a resolution, and the impact on the prices of commodities like crude oil and fertilizers continues to rise. Therefore, bankers anticipate a pause from the Bank of Mexico this coming Thursday. According to executives from three of Mexico's main banks, Banxico's stance will not be what the market expected just a month ago—a 25-basis-point cut in the interest rate. All three agreed in conversation with LPO that there will be a much more moderate stance this month, though they believe further cuts will continue in the coming months. "I think Banxico has been prudent, keeping rates high for many years. They started their rate-cutting cycle a little late due to prudence in reducing inflation, which is already at 4% and moving in that direction (of continuing to fall)," he added. For Jorge Arce, general director of HSBC México, Banxico will continue to cut interest rates this year, but he also considered that it could take a pause this Thursday due to the global geopolitical context. Manuel Romo, head of Banamex, also estimated that the Mexican central bank will follow the steps of the U.S. Federal Reserve (Fed) and halt the rate cuts. "It is very difficult to predict how long the impact of hydrocarbons will last and how much will be passed on to prices; it is very complicated." One of the announcements was the banking industry's commitment to temporarily waiving fees for card payments at gas stations, a measure aimed at promoting electronic payments.
