The Governor of Banxico, Victoria Rodríguez Ceja, issued several clear and forceful signals yesterday, April 21.
The first is the central bank’s commitment to maintain purchasing power protection.
The second is that it will act without hesitation to achieve the 3% target. And the third, in an exercise in realism, admitted that in the face of the complicated international inflation scenario, in Mexico, the risks for inflation remain on the rise.
However, he anticipated that towards the second half of the year, inflation will begin to converge towards 3%. This will be reached in mid-2023.
The governor of the central bank appeared before the Senate of the Republic and there she presented her diagnosis.
What he said yesterday is just the music the markets wanted to hear. He listed the central bank’s commitments.
He emphasized that the Bank of Mexico’s commitment to protecting the purchasing power of the currency is inalienable.
Society, he warned, can rest assured that the central bank will act in a timely manner so that inflation converges towards the 3% target.
The governor underlined her social concern.
He commented that among the costs of inflation, it stands out that it reduces the purchasing power of money.
Since lower-income families have less access to the financial system, they tend to keep a higher proportion of their income in cash and, consequently, it is these families that are most affected by the inflationary phenomenon, which tends to increase the poverty and inequality in income distribution.
Among the risks, he emphasized the international context.
He pointed out that the world’s central banks, including Mexico’s, are facing the most difficult situation in the last four decades.
He said that high and volatile inflation tends to negatively affect the growth and development of countries.
This is because, among other factors, it affects the long-term planning of economic agents; it distorts their decisions affecting the efficient allocation of resources in the economy; and it can foster a process of financial disintermediation.
That is why Banxico has increased its reference rate from a level of 4% to 6.50% where it is currently.
He also warned that despite episodes of volatility, the Mexican peso has so far been able to absorb various shocks from abroad, efficiently and solidly.
It has remained in a range between 19.79 and 21.92 pesos per dollar. With regard to growth, Banxico’s forecasts for this year foresee a GDP expansion of between 1.6 and 3.2 percent, with a point estimate of 2.4%.
For 2023, GDP growth is anticipated between 1.9 and 3.9% with a point estimate of 2.9%.
The governor also spoke about the strength of banking, the Spei 2.0 and the digital currency that will be ready in 3 years.
In general terms, Rodríguez Ceja made it clear that the priority for the governing institution is the abatement of inflation because it has very costly effects on the population’s income and assets.
The position of the first woman to govern Banxico is reassuring. At the time
glimpses
BANORTE.- The one that goes with everything, and most analysts agree that it has everything to be the bidder with the highest probability of winning the bid for the purchase of Banamex, is Banorte, headed by Carlos Hank González.
Yesterday its general director, Marcos Ramírez Miguel, revealed that he has already begun to have contact with Citigroup, although he acknowledged that it is a process that will take many months.
The first thing is to see and analyze everything that Banamex made available to bidders in its data room.
Almost all specialized economic analysts agree that Banorte is the one with the best chance of staying with Banamex, both because of its capital strength and because of its national brand. We will see.
Journalist
Rich and Powerful
He has worked continuously in newspapers, magazines, radio, television and the Internet, in the last 31 years he has specialized in business, finance and economics. He is one of the three hosts of the program Alebrijes, Águila o Sol, a program specialized in economic issues that is broadcast on Foro TV.