Inflation is not out of control: Gerardo Esquivel

Inflation is not out of control: Gerardo Esquivel

It even goes further. Esquivel does not consider any measure of a nature other than the one they have executed to be necessary. With the instrument they have, the reference rate, they have managed to contain price volatility.

The comment comes after being asked about the outline made by President Andrés Manuel López Obrador on the possibility of applying food price controls if they continue to rise.

The deputy governor of Banxico explains that despite the fact that it is a difficult situation, it is not, not even close, one of the most complex that the country has faced.

This is how the Harvard graduate mentions it, who mentions that the fiscal measure has helped to contain inflation and that there is no growth as accelerated as in countries in Europe and the United States.

Inflation in the first half of March in Mexico was 7.28%, while the same indicator in the United States stood at 7.9% in the same month.

Even so, the member of Banxico’s Governing Board comments that the high price of fuel is a consequence of the armed conflict between Russia and Ukraine, but it is a transitory shock that will have both positive and negative repercussions for public finances.

“On the one hand, it improves their income through oil exports and, on the other, it is a cost due to the subsidy that is being granted to gasoline, but the calculations suggest that the impact is null.

“In such a way that it is not necessarily a fiscal hole, it is not an unsustainable cost and it can be maintained for a while.”

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Although this intervention in public policy is not the best, Gerardo Esquivel believes that the government has made a good decision to try to contain the inflationary effect.

Effects of an open economy

The professor with a license from the Colegio de México calls on Mexicans to take into account that the inflation they suffer is not a consequence of internal policy decisions but rather of living in an open economy.

“Our job is to try to make these effects as inexpensive as possible and to make them as short-lasting as possible. This can’t be done magically, it takes a little time,” he said.

Banxico forecasts that inflation averaged 7.2% in the January-March period of this year and that the indicator will gradually trace a downward trajectory; however, it will be entered in the second quarter of 2023 when it converges on the target (3% +/-1%).

With everything and how challenging the panorama looks, Gerardo Esquivel emphasizes that the Mexican central bank is a great reference on a global scale.

“We are making the decisions that we consider opportune so that inflation returns in a reasonable period, not as soon as we would like, to our objective of 3%”.

And he concludes: “We are a central bank with a good world level in decision-making processes and transparency. We are one of the most advanced and we also have the virtue, in a context in which gender equity is being discussed, of being at the forefront, not only because it has a female governor but also a board with women and these are aspects that are worth noting ” .