Inflation will exceed 7% in December, a serious problem: Jonathan Heath

The Mexico inflation may reach 7.1% or 7.3% in December, which will be the largest variation in 20 years, acknowledged the deputy governor of the Bank of Mexico, Jonathan Heath.

“Now our year-end estimate for December is between 7.1% or 7.3%, it really is a pretty serious problem. It means that we are facing the problem of higher inflation of the last 20 years, without a doubt ”, he stressed before finance executives.

According to the central banker, inflation in October reached 6.2% and has not yet reached the peak of inflation in 2017, which was 6.8 percent. However, he emphasized that “for November it is almost a fact (that it will be achieved). My personal projection, but I think I am quite close, is that inflation is going to exceed 7% (since November) ”.

By participating in the first conference of the Annual Convention of the Mexican Institute of Finance Executives (IMEF), stressed that the trajectory is clearly upward in all components of inflation. It refers to the prices of food, non-food products and even services. And even taking it into account, and having the constitutional obligation to ensure price stability, he warned that the decisions of the Governing Board of the Bank of Mexico they must also take into account the output gap and the economic context.

The pandemic has created a series of distortions in the economy and inflation that make it difficult to read and make decisions. It seems very clear that we must raise the rate, but not at an exaggerated step so as not to hinder the economic recovery, he admitted.

From their perspective, the recovery has been fragile, prolonged and “quite difficult”, because unlike countries like USA, which have a larger productive structure, the space in Mexico to give a fiscal stimulus was much more limited.



Reference-www.eleconomista.com.mx

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