Inflation is on everyone’s lips. And it is not for less when the rapid increase in prices affects a family budget as well as the financial markets and the finances of world economies.
If inflation were a local problem, indicators such as the exchange rate would be affected. But if the increase in prices is global, it implies that measures must be of that magnitude to put a brake on the rate of increase in prices.
The initial causes of this inflationary bubble are not solved. It may be that some bottlenecks in supply and industrial logistics have been unblocked, but Russia is still involved in Ukraine and the effects on energy and food continue to worsen.
The combination of high prices in these two axes, food and energy, together with the monetary measures that are now accelerating to curb second-order increases seem to make it inevitable that the anti-inflationary medicine will be economic slowdown, perhaps to recessionary levels.
That is going to be a problem in the future, more so in a country like Mexico that depends so much on the country that is the epicenter of Western monetary policy and with such low levels of public and private investment that condition growth and productivity.
But if the economic patient who is in the Intensive Care Unit arrived due to the seriousness of inflation, then that emergency must be addressed now and later a rebalancing of interest rates and growth will be sought.
If inflation is a topic of general interest, there is more attention to the monetary policy decisions of the Bank of Mexico, what it does and does not do is already noticeable in the financial markets, because now it not only has to attend to the inflationary measurements of the Inegi but the decisions made by the United States Federal Reserve.
Thus, the Board of Governors of Banco de México needs both effectiveness and credibility in its decisions, not only because the prices of food and other raw materials continue to rise, but also because of the increase in relative prices.
The inflationary report for the first fortnight of this month of June shows that inflationary pressures do not subside, the general index is at 7.88%, the most volatile inflation at 9.13% and agricultural products at 14.31 percent.
But in terms of curbing the contagion to the rest of the prices, the most alarming data is that the inflationary core index, the subjacent inflation, rose more than the general inflation in the past fortnight to 7.47% in annual terms.
Therefore, yesterday’s increase in the Bank of Mexico’s interbank interest rate of 75 basis points, to a level of 7.75%, was not a surprise. What caught the attention of the markets is that this determination was presented as a monolith, without making the voting score clear and with a clear restrictive bias.
In the following decisions, says the monetary policy announcement, the Governing Board intends to continue increasing the reference rate and will consider acting with the same forcefulness if required.
Forcefulness
new increases
In the following decisions, the Governing Board intends to continue increasing the reference rate and will evaluate acting with the same forcefulness if required.
Surveillance
The Governing Board will closely monitor inflationary pressures, as well as all the factors that affect the forecast trajectory for inflation.
Unanimity
With the presence of all its members and unanimously, it was decided to increase the target for the reference interest rate by 75 basis points to a level of 7.75 percent.
Televisa News Anchor
The great Depression
Degree in Communication Sciences from the National Autonomous University of Mexico, with a specialty in finance from the Autonomous Technological Institute of Mexico and a master’s degree in Journalism from the Anahuac University.
His professional career has been dedicated to different media. He is currently a columnist for the newspaper El Economista and news anchor on Televisa. He is the owner of the 2 pm news space on Foro TV.
He is a specialist in economic-financial issues with more than 25 years of experience as a commentator and host on radio and television. He has been part of companies such as Radio Programas de México, where he participated in VIP business radio. He was also part of the management and talent team of Radio Formula.