Jonathan Heath rules out that Banxico’s interest rate reaches 12%

“In my very personal opinion and based on the data available today, I do not see the terminal rate reaching 12%, but rather I estimate that it will be in a range of 11.25% to 11.75%,” Heath said in an interview with the newspaper El Financiero.

The official considered that the rate is already approaching its terminal level, but what is important now is to determine how long it will be at that point before starting a cycle of decreases, which will depend on the time it takes for inflation to converge with the target of long term of 3%.

Since the central bank began its current restrictive cycle in June 2021, it has increased its rate by 700 bp and analysts anticipate a new increase of a quarter of a percentage point in March to 11.25%, according to a survey by the financial group Citibanamex.

The deputy governor of Banxico also estimated that at the end of this year the general and core inflation index would end slightly below 5%.

With information from Reuters