Quotes from Barclays Capital:
-Banxico’s December meeting minutes showed that the majority of board members believed that the balance of risks of inflation also deteriorated but real MXN depreciation reflects lower oil prices and higher expected real rates. The main concern was the depreciation of the MXN. Although the pass-through has been low, the persistence of a depreciated currency could contaminate inflation.
-Nevertheless, the board believes that a real depreciation is consistent with lower oil prices and higher expected real rates. This allows us to believe that Banxico is comfortable with a real MXN depreciation, given these global macroeconomic developments, and as long inflation is not over-contaminated, there is no need to react.
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