Background on Cetes and Banxico
Certificados de la Tesorería de la Federación, or Cetes, are interest-bearing securities issued by the Mexican government to finance public spending. Banco de México (Banxico), the country’s central bank, manages these Cetes. Banxico sets monetary policy and aims to maintain price stability in Mexico.
Recent Cetes Auction Results
According to the weekly government securities auction results released by Banxico, interest rates on Cetes have fallen. This development aligns with market expectations of a potential rate cut in Banxico’s upcoming policy meeting on Thursday.
- 28-day Cete: The interest rate dropped by 0.05 percentage points to 7.20%. A total of 7,000 million pesos were issued with a demand of 2.60 times the amount issued.
- 91-day Cete: The interest rate decreased by 0.03 percentage points to 7.50%. Banxico issued 7,000 million pesos with a demand of 3.92 times the amount issued.
- 175-day Cete: The interest rate fell by 0.09 percentage points to 7.57%. Banxico issued 14,600 million pesos with a demand of 3.07 times the amount issued.
Anticipation of Banxico’s Policy Meeting
The auction took place two days before Banxico’s policy meeting, where investors anticipate that the bank’s governing board members will reduce the reference rate by another 25 basis points. If this occurs, the cost of money will fall from 7.75% to 7.50%.
Should Banxico confirm this adjustment, it would mark the third consecutive rate cut in 2025, reinforcing expectations that interest rates will continue to decline by year-end.
Key Questions and Answers
- What are Cetes? Cetes are interest-bearing securities issued by the Mexican government to finance public spending. Banco de México (Banxico) manages these Cetes.
- Who is Banxico? Banco de México (Banxico) is the central bank of Mexico, responsible for setting monetary policy and maintaining price stability in the country.
- Why are Cetes interest rates falling? The falling Cetes interest rates reflect market expectations of an upcoming rate cut by Banxico in their policy meeting.
- What is the anticipated rate cut magnitude? Investors expect Banxico to reduce the reference rate by 25 basis points, lowering it from 7.75% to 7.50%.
- How many consecutive rate cuts are expected in 2025? If confirmed, this would be the third consecutive rate cut by Banxico in 2025.
