EconomyInflation will give Mexicans a truce, but not the...

Inflation will give Mexicans a truce, but not the Bank of Mexico

The good news: prices will give Mexicans a truce. The bad news: that these will continue far from the objective of the Bank of Mexico (Banxico).

Annual inflation in the fifth month of the year points to a slight slowdown, but it will be insufficient for the central bank to ease its monetary policy in the following months.

A Reuters survey of 14 analysts shows a median of 5.86% for May inflation, a level lower than the 6.08% rebound registered in April, but far from Banxico’s inflation target of 3%, +/- one point. percentage.

The slowdown in prices may be linked to a reduction in electricity rates in several cities of the country due to the hot season.

Only in May, prices would have grown 0.17%, while for the core index the median of the projections was 0.47%.

Regarding core inflation, estimates indicate that it would be at 4.31% per year.

Banxico left the benchmark interest rate at 4% in mid-May, in a unanimous decision, citing the need to consolidate a decreasing trajectory of inflation towards its target of 3% +/- one percentage point.

Analysts consulted in a Banxico survey published last week expect that the key rate will close 2022 at 4.50% and that this year it will leave it intact.

Felipe Hernández, from Bloomberg Economics, recently highlighted to Expansión that beyond Banxico not meeting its inflation target, foreign investors analyze the monetary policy response to high inflation and it is expected that only if inflation does not subside, there could be movements in the monetary policy decision.

The governor of Banxico, Alejandro Díaz de León, said last week that the high levels of inflation will be temporary.

In its quarterly report, the central bank estimated that the Mexican economy will have a growth range of between 5% and 7%, with 6% being the central scenario.

The National Institute of Statistics and Geography (Inegi) will disclose on Wednesday the behavior of the National Consumer Price Index during the fifth month of the year.

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