Banxico warns of ‘more gradual than expected’ fall in inflation

The Bank of Mexico (Banxico) warned this Thursday of a “more gradual than expected” decline in inflation, so it reiterated that it must maintain the inflation rate for a “long period”. interest rate 11.25%, highest level in history.

“The majority (of the Board of Governors) indicated that main inflation forecasts and the underlying asset was adjusted upward to reflect a more gradual decline than previously thought. “All noted that inflation is now expected to move closer to target (3%) in the second quarter of 2025,” he said in the report.

Central bankers explained this stability of inflation “in anticipation of greater sustainability of the service component due to the accumulation of costs that have not yet been transferred into prices at this point.” consumer“.

Everyone agreed that the balance of risks relative to the expected inflation path over the forecast horizon remains biased upward. Some noted that they believed this balance had worsened.

The minutes correspond to the meeting of September 28, when Board of Governors The interest rate remained unchanged at 11.25% for the fourth time in a row.

The document comes after it was reported last Monday that headline inflation fell to 4.45% in September, the lowest level since February 2021, after recording an index of 7.82% in December, its highest level by late years at the moment. century

But Banksico raised its forecast for headline inflation, now estimating it will average 4.7% a year in the final quarter of 2023, up from its previous forecast of 4.6%.

Likewise, it downgraded its expectations for the end of 2024, when inflation will average 3.4%, higher than the previous forecast of 3.1%.

“Although progress has been made in the disinflation process, the outlook remains very challenging,” the Governing Council said.

On the other hand, the central bank believed that Mexico’s economic recovery Since the Covid-19 pandemic, “it has turned out to be more dynamic than expected.”

“Available information suggests that national economic activity continued to expand in the third quarter of 2023,” Banxico said after annual growth of 3.7% gross domestic product (GDP) in the first half of the year.

Next monetary policy decision It will be November 9th.


Source: Aristegui Noticias