He Central Bank of Mexico (Banxico) considered it necessary to preserve “for a certain time” his key base rate at a record high 11.25%in the face of a situation that is still perceived as difficult, despite the disinflation.
This is necessary to achieve an orderly and sustainable convergence inflation to the target of 3%, an autonomous body has been identified.
According to the minutes of its latest monetary policy decision, published this Thursday, the Banxico Board of Governors considered that while headline and core inflation maintain a downward path, the balance of risks relative to its expected path over the forecast horizon remains biased upward.
The central bank expects inflation to approach target in the second quarter of 2025. The bank’s deputy governor expected a review of “fine adjustments” to the rate could begin in the first quarter of 2024, according to the minutes. .
Headline inflation accelerated in the first half of November to 4.32% year on year, according to data released this Thursday. National Institute of Statistics and Geography (Inegi).
This figure is higher than the 4.26% recorded in October. Analysts had expected the rate to be 4.31% in the eleventh month of the year, according to a survey conducted by Reuters.
For its part, inflation underlying, Considered a better measure of price path because it excludes high-volatility products, it fell for the nineteenth two weeks in a row to 5.31%, its lowest level since October 2021.
Banksico’s minutes showed that the deputy governor Irene Espinosa He had a dissenting view on the announcement, although he voted to maintain the rate, arguing that meeting the inflation target in the second quarter of 2025 has become more difficult as the disinflationary process has slowed.
“In my opinion, the upward shift in the balance of inflation risks has strengthened with more resilient economic activity, the cyclical position of the economy in positive territory, labor market tensions, persistence of core inflation, inflation rather than the underlying trend with an upward trend, inflation expectations above our target, which will not be reversed, and a pro-cyclical fiscal policy for 2024,” he said.
“Going forward, the commitment to achieve fiscal consolidation from 2025 represents a huge additional challenge. Given this situation, I believe we must remain cautious and cautious in our communications and not get ahead of ourselves in changing forward guidance, given the high level of uncertainty around the downward trajectory of inflation,” he added.
On the other hand, the majority emphasized that, according to relevant data Gross Domestic Product (GDP) In the third quarter of 2023, economic activity showed greater dynamism than expected. Most noted that growth rates remain high.
Banxico’s next monetary policy statement is scheduled for December 14.
(according to Reuters)
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.
