January trade data is due out on Wednesday and January CPI will be reported Friday. Sluggish growth and low price pressures should allow the central bank to maintain a “modest pace” of tightening after it started the cycle with a 15 basis point hike in November. The next policy meeting is scheduled for February 25, and no change is expected then.
January CPI and December IP due out on Tuesday. While price pressures are falling, “we disagreed with last week’s surprise rate cut since it came too close to May elections,” Win Thin, head of emerging market strategy with Brown Brothers Harriman told clients. The next policy meeting is April 4, and no change is expected then. However, another dovish surprise is possible.
December IP will be reported Monday, which is expected to contract -1.6% y/y vs. -1.3% in November. Banco de Mexico just delivered a dovish hold, while January CPI inflation eased to 4.37% y/y. “We think the tightening cycle has ended, but much will depend on global factors. The next policy meeting is March 28, and no change is expected then,” Thin said.
December retail sales, trade, and IP are all due out on Thursday. The data are expected to slow from November. The economic outlook is solid, aided by higher oil prices. “While a tightening cycle is likely to start this year, we feel the central bank will hold off until the global outlook becomes clearer,” This explains, and the next policy meeting is March 29, with “no change is expected then.”