BANXICO says it is “premature” to think of ending rate hike cycle in Mexico


It is “very, very premature” to start thinking of ending the current interest rate-hiking cycle in Mexico, one of the Mexican central bank’s board members said on Twitter on Monday.

“The Federal Reserve will continue to go higher for a while until starting to see results and we will have to do practically the same,” board member Jonathan Heath said.

Heath acknowledged that inflationary pressures were being felt around the world, but said Mexico’s economy had certain idiosyncrasies that have complicated the problem, pointing to what he called low competitiveness in “many sectors”.

“A restrictive monetary policy will not be able to solve this problem, but it can help to limit it,” Heath said.

Monetary policy consistent with current inflationary pressures should help to mitigate second round effects, he added.

Otherwise, the problem risks becoming worse and cementing structural issues that feed inflation, Heath said.

Source: El Financiero

Mexico Daily Post