Banxico’s bullish cycle would culminate with the interest rate at 11% in 2023: Franklin Templeton

investment fund manager Franklin Templeton foresees that the current restrictive cycle of Banco de México will lead to the interest rate referential to a maximum of 11% in the first half of next year to then begin to gradually reduce it, said one of his local strategists on Thursday.

Since Banco de México (Banxico) began raising the funding rate in the middle of last year after inflation began to accelerate, the cost of credit has risen a total of 600 basis points to its current level of 10 percent.

“We believe that the terminal rate will be 11% for the first semester,” he said. Luis Gonzali, Co-Director of Investments at Franklin Templeton Mexico. “By the end of 2023, Banxico could start lowering rates, albeit gradually. I don’t think we’ll see Banxico surprising all of us,” he said.

According to the expert, the decrease would break with the balance that the entity has been taking care of in the face of the decisions of the Federal Reserve, affecting a weakening of the peso, which this year accumulates a gain of 4%, the best performance among its peers in the region.

Even so, the Mexican currency, which oscillated on Thursday around 19.65 pesos per dollar, would continue “strong,” he said.

Banxico’s next monetary policy announcement is scheduled for next week and much of the market anticipates a 50 basis point hike after four consecutive three-quarter percentage point increases amid moderating price levels.

The deputy governor of the central bank Jonathan Heath He said earlier in the week that the bank may start to slow its pace of monetary tightening.

In the morning, official figures showed that inflation slowed last month much more than expected by analysts, to 7.80% after reaching 8.41% in October and moving away from the record of 8.70% reached in the previous months.