Henry Romero/Reuters
A man walks past a board displaying the exchange rate for Mexican peso against the U.S. dollar and the Euro at a bank in Mexico City, Mexico, November 17, 2016.
Economists expect that the bank, often referred to as Banxico, will hike rates by 50 basis points to 5.25%, up from 4.75%.
Thursday's monetary policy announcement comes after a tumultuous few weeks for the Mexican peso, which has been one of the big market casualties of the US presidential election.
The currency fell to a record low against the dollar on election night as rolling results increasingly pointed to a Trump victory. It continued tumbling over the course of last week, but has since retraced some of its losses.
The peso became something of a gauge of Donald Trump's prospects during the last few months leading up to the election. Often times when traders thought Trump's prospects of winning went up, the peso went down against the US dollar - and vice versa. Analysts and economists had attributed this to the fact that his strong protectionist platform would likely have negative repercussions for the Mexican economy if implemented.
In light of the peso's weakness, a Credit Suisse team led by Shahab Jalinoos wrote they won't just be looking at what Banxico does on Thursday, but also what it says.
"The language will also be under intense scrutiny, especially with regards to the previous claim that Banxico would mirror the Fed's tightening path," they wrote in a note to clients. "Anything suggesting Banxico might opt to tighten more aggressively than the Fed would likely prove supportive for" the peso.
Notably, while the consensus is for a 50 basis point hike, a Deutsche Bank team led by Drausio Giacomelli wrote in a note that they think a hike of 75 basis points is slightly more likely, arguing that "Banxico would rather not risk another bout of peso weakness at the current level."
The Mexican peso is little changed at 20.2332 per dollar as of 1:11 p.m. ET, after dipping into the red earlier in the morning.
