Cut benefits banks

MEXICO CITY (EFE).— The relaxation of the monetary policy of the Bank of Mexico (Banxico) is positive for the bank, by allowing it to place more commercial credit, increase payment capacity and mitigate the costs of long-term financing, he noted. Yesterday Moody’s.

The sectoral analysis refers to Thursday’s decision by the Mexican central bank to cut the interest rate by 25 basis points to 11%, following a year at the highest level in its history, so the firm considered that with this movement Banxico a new cycle of its monetary policy begins.

“Primarily, the relaxation in monetary policy for banks is positive, since it can mean greater volumes of credit placement,” the agency said.

The Moody’s Local analysis area stated opportunities to increase banks’ commercial portfolios, given a lag in their growth dynamism compared to consumer portfolios, and which are more susceptible to changes in rates.

However, he recalled that banks have already set some of their rates below this reference, which is why he calculated less sensitivity to the recent adjustment in their credit portfolios.

In addition, he added, “the banks’ financing cost immediately adjusts to the change in rate, which might also benefit the margin in the future if rates continue to fall.”

inflationary control

On the other hand, Moody’s noted that Banxico’s inflation control can also benefit the disposable income of Mexican households, mitigate increases in banks’ cost of risk in general and support asset quality metrics in the future.

In this sense, he indicated that he expects improvements in general indicators of asset quality such as delinquency, the cost of risk and the level of bank write-offs, since the relaxation in monetary policy can translate into a better payment capacity of households. Mexicans.

“It must also be considered that the quality of banking assets in general has proven to be quite resilient to a challenging macroeconomic environment. Banking delinquencies and adjusted delinquencies remain at fairly stable levels,” the rating company concluded in its recent report.

AMLO celebrates cut

President Andrés Manuel López Obrador affirmed yesterday that the reduction in the Bank of Mexico rate will be beneficial for investment and the government’s debt.

In his usual daily press conference, this time from the port of Coatzacoalcos, the president described Banxico’s measure as “a good decision, which will bring benefits to the economy in general.”

“It does help to lower rates because that means you can invest. It helps people and businessmen to invest and it also helps us, all Mexicans,” the president said before the media.

López Obrador added that in the case of public finances, cutting the cost of credit will help reduce the variable interest on the Government’s debt, since 70 percent of the total amount is recorded in pesos and not in other foreign exchange.

The president highlighted that the Mexican currency was not immediately affected by Banxico’s measure.

The monetary entity estimates that general inflation might reach the official objective of 3.0 percent in the second quarter of 2025. Inflation in Mexico stood at 4.48 percent year-on-year until the first half of March, according to data most recent official