Friday, December 02, 2022

No surprise that Banksico’s interest rate will close between 9% and 10% in 2022: Heath

No surprise that Banksico's interest rate will close between 9% and 10% in 2022: Heath

Mexico City – Bank of Mexico (Banxico) interest rate will close between 9% and 10% in 2022The Lt Governor said, as long as there are no surprises and the current scenario is maintained, within the limits projected by the market, inflation will reach its peak in the third quarter of the year. Jonathan Heath,

During a webinar organized by the Mexican Institute for Competitiveness (IMCO), the deputy governor said this year’s terminal rate, which currently stands at 8.5%, will depend on several factors, including the development of inflation in Mexico and the United States. State.

“Assuming that there are no surprises, I think that’s basically what the market is guessing and the economists aren’t so wrong (…) by the end of the year they’re about 9%, 9.5% or 10%. Talking about, I think almost there I will think (by the end of the year)”

Jonathan Heath, Deputy Governor of Bangkok

Heath remarked that the limit of cup terminal It assumes that the Federal Reserve (Fed) raises its interest rate by between 50 and 75 basis points, as expected by the market, while subsequent decisions increase between 3.5% and 4% to reach a final rate of 50. Can be between 25 marks.

He explained that, in this type of Fed scenario, one is looking for relative monetary policy positions in the context of Banxico. The referral is 600 basis points with respect to the Fed.

In this sense, he indicated that at this time no need to widen that gapIt is in this context that Banxico is just entering the bottom of the restrictive terrain, which means that Interest rate hike in Mexico to continue And the bullish cycle is not over yet.

“At least between now and the end of the year, I think whatever the Fed raises, more or less, we’ll do the same to maintain that gap. We still can’t afford to narrow it Well, we’re going to hold it steady and take advantage of the rate hike in the US to make our position a little more restrictive.

Jonathan Heath, Deputy Governor of Bangkok

Heath forecasts headline inflation to be at 8.6% or 8.7% year-on-year in AugustThat could indicate the peak of inflation in Mexico, as Banxico forecasts price increases to peak in the third quarter of the year.

He pointed out that members of the central bank’s governing board are carefully following medium- and long-term inflation expectations, however, as a downward trajectory of inflation is expected to begin in 2023, the trend will be fraught with risks.

“I think almost all of us more or less agree that we still have to go a little bit further into that restrictive zone, that is, the rate hike cycle is not over yet, but we already have a monetary stance. “More consistent with limiting inflation in the medium and short term (…) is expected to slow already as we have a more restrictive monetary policy”

Jonathan Heath, Deputy Governor of Bangkok

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