He Bank of Mexico (Banxico) this Thursday remained unchanged for the fifth time in a row. interest rate at 11.25%, the highest level in its history, announcing that it would still have to maintain that level “for some time.”
In a statement that was in line with market expectations, the central bank “acknowledged that the country’s disinflationary process has advanced” and therefore upgraded its forecasts for inflation for 2023, but “he believed the outlook remained fraught with challenges.”
The decision to continue the growth inhibition that began during COVID-19 pandemic in June 2021 and gained 725 basis points, it was approved unanimously and occurred in accordance with US Federal Reserve System (FRS)which last week for the second time kept the rate in the range from 5.25% to 5.5%.
The decision came after hours before headline inflation fell to 4.26% in October, the lowest level since February 2021, following the index’s recording of 7.82% in December, its highest year-end level in this century.
“Since the last monetary policy meeting, annual headline rates and core inflation have continued to decline. However, both indicators remained high, amounting to 4.26% and 5.50% respectively in October,” the bank’s board of governors said.
Banxico cut its headline inflation forecast, now estimating it will average 4.4% annually in the final quarter of 2023, down from a previous forecast of 4.7%.
At the same time, he maintained his expectations until the end of 2024, when inflation will average 3.4%.
You might be interested > Inflation slowed to 4.26%, the lowest level since 2021.
The central bank noted that “while the outlook continues to be perceived as challenging, progress has been made in the disinflationary process.”
Despite this, “he believes that to achieve an orderly and sustainable approach of headline inflation towards the 3% target, it will be necessary to maintain the base rate at its current level for some time.”
He cited continued high core inflation, exchange rate depreciation, increased price pressures, stronger-than-expected economic resilience, and pressure on energy and agricultural prices as risks to growth.
“The balance of risks relative to the expected inflation path over the forecast horizon is believed to remain tilted upward,” he warned.
The next monetary policy decision, the last this year, will be made on December 14.
(EFE)
Source: Aristegui Noticias
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
