MEXICO CITY.- The Board of Government of the Bank of Mexico (Banxico) warned of rising inflation, higher risks and inflationary pressures external to the increase in prices and “bottlenecks” in production.
“The majority considered that the balance of risks for inflation in the forecast horizon is on the rise,” revealed this Thursday the central bank’s minutes on its monetary policy meeting on September 30.
The headline inflation in Mexico rose in September to 6% per year, double the Banxico goal and the highest figure since April of this year, driven by the rise in agriculture and livestock and energy.
Inflation forecasts for 2021 have increased, as reflected in the latest Banco de México survey of private sector specialists, who now estimate a general increase of 6.26%.
“Among the upward risks for inflation, the majority (of Banxico’s Governing Board) highlighted external inflationary pressures. Some added cost pressures and an exchange rate depreciation,” added Thursday’s text.
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The minutes correspond to the meeting of September 30 in which Banxico raised the interest rate to 4.75%, the third consecutive increase of 25 basis points, which had remained at 4% until June, the lowest level since 2016.
The deputy governor Gerardo Esquivel he was the only one who voted against, considering that “raising the interest rate at this juncture is ineffective and inefficient.” “It is ineffective because a higher rate does not resolve the factors that originate inflationary pressures: an increase in
international prices of inputs and disruptions in supply chains.
It is inefficient because the increase could affect the economy, “he argued, according to the bill. Despite the inflationary outlook, officials from the Bank of Mexico coincided in the recovery of the national economy, whose growth forecast for 2021 rose to 6.15%, according to the latest survey by the autonomous body.
“Most stressed that the recovery of the Mexican economy is expected to continue for the rest of the year and 2022. One explained that this forecast is supported by advances in the vaccination process, the boost in external demand and the recovery of the internal spending “, the minute deepened.
The members of the Governing Board highlighted an annual rise of 23.5% in remittances so far this year and that the “wage bill” in July exceeded the levels of February 2020, before the impact of the pandemic. Even so, they warned that “marked persistence between sectors and regions”, while “weak conditions prevail in the labor market.”