Last month, Banxico decided in a divided manner to lower 25 basis points from its reference interest rate, at 11% in the first adjustment since a monetary tightening cycle began in mid-2021, but the door to more monetary cuts in the short term appears to have closed.
“We are not going to discuss the possibility of a cut in May,” Heath told Reuters on Friday on the sidelines of the spring meetings of the International Monetary Fund and the World Bank, suggesting the possibility of two to four rate cuts this year. depending on the evolution of the economy.
The official stressed the importance of waiting until inflation in the service sector in Mexico shows a clear downward trajectory, and pointed out that it would be necessary for the entity to meet inflation objectives to cut rates.
Mexico's general inflation has accelerated after bottoming out at 4.26% in October and is above the Bank of Mexico's target of one point above or below 3%.
The peso will probably head to a “more sustainable rate,” close to 17 units per dollar, Heath said regarding the local currency, noting that the 16.3 units it has recently posted seemed too much and that “it's good that it stops a bit”.
Furthermore, he clarified that the fluctuation in the value of the Mexican peso is more linked to global events than to local factors.
Heath also said that the elections in the United States could affect Mexico, particularly if Republican Donald Trump defeats current President Joe Biden, since a victory for the former president could put private investment in the country at risk or complicate the renegotiation of the agreement. free trade between both nations and Canada.
