The Day at a Glance | February 4 2021

The Top

· Banxico could wait until April to lower interest rates: Jonathan Heath.

· Bank of England says it will not implement negative interest rates in the next six months; the banking sector is not prepared.

· Economic indicators: Initial jobless claims continue to slow down in the US (779 thousand vs. 830 thousand e.).

Economic environment

Banxico could wait until April to cut interest rates. In an interview made public yesterday, Vice Governor of the Bank of Mexico Jonathan Heath said that the central bank will probably discuss whether or not a new window of opportunity has opened up regarding the possibility of continuing to cut interest rates in the bank`s next meeting (February 11th) – or if it must maintain a pause in the cycle of cutting the rate as inflation has started to accelerate. Heath expects inflation to accelerate more in April, and after that to return to its downwards trend towards the bank`s 3% objective. It`s possible that the slowdown, which is forecasted to be seen after April, will not even occur and that the window of opportunity for Banxico to cut rates may be non-existent, Heath assured. The majority of market players and analysts forecast a cut in interest rates as soon as this month. Heath has been one of the Governing Board`s members to argue in favor of cutting rates even more; he has voted for decreasing the rate`s objective to 4% in the last two meetings despite the fact that most of the Governing Board`s members decided to pause the cycle. His vote will be crucial in the following meetings for Banxico to resume its cycle of cutting rates.