In mid-December, the central bank raised its benchmark interest rate for the fifth time in a row to 5.5%, citing a deterioration in inflation forecasts that, in mid-December, reached 7.45%, its highest level in Two decades.
“The majority (of the governing board) highlighted that expectations for the end of 2022 are already above the upper limit of the target range,” the central bank said.
Banxico, which has an inflation target of 3% +/- one percentage point, expects prices to accelerate by 7.1% in 2021.
“More than half of the generics that make up the INPC are growing at rates above 5%,” read the minutes of the central bank. It also points out that, as a result of economic integration with the United States, higher inflation in the northern neighbor has contributed to the rise in this indicator in Mexico.
The entire governing board of the central bank agreed that the conditions of slack in the Mexican economy have been maintained, but the majority pointed out that “marked differences” between sectors continue to be observed.
In addition, the majority of the five members of the governing board noted that the recent increase in the minimum wage of 22% could put pressure on labor costs.
With information from Reuters