In its monetary policy statement, Banxico indicates that the pressures for rising prices will continue in the following months: “Both general and subjacent inflation have continued to be affected by the accumulated pressures derived from the pandemic and the war. The corresponding expectations for 2022, 2023 and the medium term they were adjusted upwards again. Long-term rates remained stable, although above the target.”
Banxico estimates that this year inflation will close at 8.3%but that will be until first quarter of 2024 when the variation of the general index enters the range of its inflation target with a 3.8%
The entity has increased the target rate by 525 basis points as part of a cycle of increases that began in June 2021, after inflation began to accelerate above the target of 3% +/- one percentage point.
The central bank explained that inflationary risks are a persistence of subjacent inflation at high levels; 2) external inflationary pressures derived from the pandemic; 3) greater pressure on agricultural and energy prices due to the geopolitical conflict; 4) exchange rate depreciation; and 5) cost pressures.
Inflation is at levels not seen in more than two decades.
Last week, the Fed raised the target federal funds rate by 75 basis points to a range between 3.75% and 4%, in its fight against the worst inflation in 40 years.
For the short term, the forecasts for headline inflation present marginal downward revisions, while those corresponding to core inflation were revised slightly upwards. Inflation is expected to converge to the 3% target in the third quarter of 2024. pic.twitter.com/97btrkX6p3
— Bank of Mexico (@Banxico)
November 10, 2022
