Mexico will continue to raise rates
2022.11.24 10:55
Mexico will continue to raise rates
Budrigannews.com – During the first half of November, Mexico’s annual consumer prices slowed more than expected, but the core inflation index, which is still a major concern as the country struggles with high costs, came in above market forecasts.
Thursday’s data from the national statistics agency INEGI showed that annual headline inflation in Mexico reached 8.14 percent during the period, down from 8.53 percent a month earlier and also below the 8.24 percent consensus of economists polled by Reuters.
Nevertheless, the closely watched core price index, which excludes some volatile energy and food prices and was recently dubbed “the greatest concern” by Bank of Mexico board member Jonathan Heath, continued to rise, reaching 8.66% annually.
Expectations that the local central bank, known as Banxico, would continue to raise interest rates were supported by the most recent inflation figures.
Andres Abadia, the chief Latin America economist at Pantheon Macroeconomics, stated, “Overall, headline inflation continues to edge down in Mexico, but core inflation remains sticky, which will continue to keep policymakers uneasy.”
Heath of Banxico stated that the central bank was “not ready yet to decouple” from the U.S. Federal Reserve and that additional rate hikes were required to control inflation in a podcast that was released on Wednesday.
According to the statistics agency, Mexico’s headline inflation increased by 0.56 percent in November, while the core index increased by 0.34 percent.An increase of 0.65% and 0.30%, respectively, had been anticipated by economists.
According to Capital Economics senior emerging markets economist Jason Tuvey, the new core inflation increase is expected to “strengthen the hand of the hawks at Banxico in the debate over how much more tightening to deliver.”
After a monetary tightening cycle that began in the middle of 2021, borrowing costs currently stand at 10% in the second-largest economy in Latin America.
The minutes of Banxico’s most recent policy-setting meeting will be made available later on Thursday.
Grupo Financiero Banorte’s economists stated that they anticipate additional information regarding the “appropriate” level for Banxico’s terminal rate and the conditions required for the company to decouple from the Federal Reserve.
Brazil, a neighbor in Latin America where the tightening cycle has already ended, released inflation data on Thursday as well.To the middle of November, there was a 0.53 percent increase in consumer prices.
