{"id":31376,"date":"2026-03-24T00:00:30","date_gmt":"2026-03-24T00:00:30","guid":{"rendered":"https:\/\/www.vtmarketsglobal.com\/en\/uncategorized\/31376\/"},"modified":"2026-03-24T00:00:30","modified_gmt":"2026-03-24T00:00:30","slug":"rabobank-expects-banxico-to-hold-7-00-as-iran-conflict-and-board-splits-heighten-inflation-risks","status":"publish","type":"post","link":"https:\/\/www.vtmarketsglobal.com\/en\/live-updates\/31376\/","title":{"rendered":"Rabobank expects Banxico to hold 7.00%, as Iran conflict and Board splits heighten inflation risks"},"content":{"rendered":"Rabobank strategists Molly Schwartz and Christian Lawrence expect Banxico to keep the overnight policy rate at 7.00% at the 26 March meeting. They refer to inflation risks linked to the Iran war and earlier concerns about persistent inflation.\n\nThey note that Mexico has some measures aimed at limiting inflation effects from the war. They still expect inflation to rise due to higher prices.\n\n

Banxico Board Divisions<\/h3>\nThey also describe divisions on Banxico\u2019s Board of Governors between members focused on inflation and members more focused on growth. They add that a weaker economic outlook could complicate the decision path.\n\nThey continue to forecast two 25bp rate cuts this year, starting in June. They say the risk is for fewer cuts and for cuts to start later in the year.\n\nLooking back at our analysis from this time last year, we correctly anticipated Banxico would hold its policy rate at 7.00% in the March 2025 meeting. The inflation concerns we flagged, stemming from the conflict in Iran, proved to be the dominant factor for the board. The risks of fewer and later rate cuts materialized throughout the year.\n\nThe central bank remained more hawkish than even we expected, delivering only a single 25 basis point cut in the fourth quarter of 2025 instead of the two we had projected. This cautious stance was a response to headline inflation that averaged 5.2% for 2025, fueled by the energy price shock from the conflict. The Mexican peso was a major beneficiary, with the USD\/MXN exchange rate falling from around 18.50 to 17.80 over the year.\n\n

Trading Implications For The Peso<\/h3>\nToday, with the overnight rate at 6.75% and the latest inflation data for February 2026 still sticky at 4.3%, traders should remain cautious about pricing in further cuts. The central bank’s history of prioritizing inflation control suggests a high bar for any additional monetary easing. This environment continues to favor strategies that benefit from a stable or strengthening peso.\n\nFor derivative traders, this reinforces the appeal of the Mexican peso carry trade. Selling out-of-the-money USD\/MXN calls to collect premium remains a viable strategy, betting that the high interest rate differential will limit significant peso weakness. Traders could also use interest rate swaps to receive the high TIIE 28-day rate, positioning for a ‘higher-for-longer’ policy stance from Banxico.\n\nThe primary risk to this view is a sharper-than-expected economic slowdown in the United States, which could dampen Mexican exports and force the board to prioritize growth. However, recent U.S. jobs data from February 2026 showed a resilient labor market, suggesting this risk is contained for now. Therefore, the path of least resistance appears to be continued peso strength in the coming weeks.\n\nCreate your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b>\n

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Start trading now – Click here<\/a> to create your real VT Markets account <\/strong> <\/p>\r\n","protected":false},"excerpt":{"rendered":"

Rabobank expects Banxico to hold 7.00% March 26; inflation risks persist; two cuts seen from June.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-31376","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/31376","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=31376"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/31376\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=31376"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=31376"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=31376"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}