Commerzbank: Banxico Rate Cuts Justified, MXN Outlook Slightly Stronger

Commerzbank strategist Michael Pfister argued that Banxico's recent rate cuts are broadly justified given the backdrop of moderating inflation and Mexico's weakening economy. According to Pfister, this leaves little reason for the central bank to tighten policy, despite markets pricing in roughly three rate cuts.

The assessment suggests a slightly stronger MXN outlook, as the rate path remains accommodative without triggering inflationary concerns. The peso has been under pressure from global risk-off sentiment, but Commerzbank sees limited downside from here.