Analysts forecast more aggressive rates and lower economic growth


The current economic outlook continues to hover around the inflation and therefore in the plans that the central banks will execute, which will have to make very precise decisions to combat high prices without leading the economies into a recession.

Specialists believe that after the historical figures on inflation, most central banks have undertaken a process of normalizing their monetary policy.

global economies

Regarding the United States, natixis believes that its economy has remained strong thanks to strong domestic demand since reopening, which, in turn, has led to a historically tight labor market, giving the Federal Reserve reason enough to act firmly in the face of inflation.

They point out that despite the good room for maneuver regarding the fundamentals of growth that the monetary authorities have, Jerome Powell has already mentioned the not insignificant probability of engineering a pseudo-soft landing for his economy.

“The bad news about that is that the Fed’s record doesn’t look very promising: every time the central bank raises rates to reduce inflation by more than 4 percentage points, the economy has entered a recession. In this sense, despite the fact that economic growth is already slowing down and inflation has probably already reached its peak in April (8.5% year-on-year), the Fed will continue to tighten its monetary policy, while growth is of little concern, for now,” the analysis indicates.

For its part, Sura Asset Management Mexico agrees that the challenge to be overcome by the world’s main economies is that those in charge of monetary politics take rates to levels that do not affect the dynamism of their economy.

“Several central banks have continued with the normalization of their monetary policy, such is the case of the Central Bank of Australia, which raised its reference rate to 0.85%, exceeding consensus estimates, the Central Bank of India also raised its rate reference +50bp to 4.9%. For its part, the European Central Bank decided to remain on the sidelines without modifying its reference rate, however, it declared itself ready to increase it in the following month”, they explain.

“Attention continues to be focused on the persistence of the high prices that consumers pay, which would mean that the cycles of increases in the reference rates would be more aggressive and, therefore, economic growth would be lower.”

Mexico

As far as the country is concerned, Citibanamex updated its fortnightly survey of expectations, the experts consulted estimate that the Bank of Mexico (Banxico) will increase its rate to 7.75% at its meeting on June 23, different from what was expected the previous fortnight when it was estimated that it would be 50 basis points. Due to the above, now the target level for the reference rate is located at 9.0% by the end of this year and 8.88% by 2023.

Similarly, the estimates for the rate of inflation at the end of this year they were revised upwards once more. According to the survey, expert economists assume that the general inflationary component will total 6.96% (previously 6.75%). For the end of the following year, the expectation is located at 4.33% (previous 4.22%). The expectation of economic growth remained unchanged at a figure that averaged 1.8 percent.

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