Citi Mexico Expectations Survey (Feb 5, 2025)

Consensus now expects a 50bps rate cut in tomorrow Banxico meeting, with a projection for the policy rate by Y/E 2025 at 8.50%. In today’s Citi Mexico Expectations Survey, the median estimate for the next move in the monetary policy rate is now a 50bps rate cut in February 2025 (25bps higher from the last survey). Of the 35 respondents, 27 expect a 50bps cut in tomorrow’s meeting, while 8 participants expect a 25bps cut. The median forecast for the policy rate by Y/E 2025 remains unchanged at 8.50% compared to the previous survey, with estimates ranging from 7.00% to 9.0%. For Y/E 2026 the median expectation remained unchanged at 7.50% from a fortnight ago.

A slightly depreciated peso for 2025, at the margin. The consensus now projects the USDMXN at 21.00 by Y/E 2025, higher from 20.95 in the previous survey. For Y/E 2026, the median expectation of the USDMXN decreased to 21.30 from 21.49 a fortnight ago.

The consensus projects YoY headline and core inflation at 3.6% and 3.7%, respectively for January. Survey participants forecast a 0.33%MoM CPI increase in January 2025, or 3.63%YoY, lower than December 2024 rate of 4.21%. Core inflation is estimated at 0.44%MoM in January, or 3.69%YoY, slightly higher than the figure for the previous month of 3.65%. For February 2025, analysts expect headline inflation at 0.35%MoM, and core inflation at 0.42%MoM.

Core inflation expectations increased for Y/E 2025. Headline inflation projections for Y/E 2025 decreased marginally to 3.90% from 3.91% a fortnight ago, and for the core component the median increased to 3.74% from 3.68% in the previous survey. For Y/E 2026, headline inflation expectations decreased to 3.72% from 3.77% previously, while core inflation estimations remained broadly stable at 3.60%. The median expectation for the average annual inflation rate in 2027-2031 remains unchanged from the previous survey at 3.70%.

GDP growth forecasts remained unchanged for 2025 at 1.0%. The consensus continues to project 2025 GDP growth at 1.0%, the same as our last three surveys, with forecasts ranging from 0.2% to 1.7%. For 2026, the median GDP growth projection remains at 1.80%.

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