The challenge for him Bank of Mexico right now it is the significant increase in inflation.
If we have learned something from the past, it is that we must not stop administering the medicine that is necessary to face it, because otherwise the patient’s health may be complicated, explained the governor of the Bank of Mexico, Alejandro Diaz de Leon.
“Stop administering the medicine that is necessary to face the present challenge today, thinking that it may be convenient to save it to administer it later, it can generate complications,” he warned.
By participating in the keynote address of the XLIX National Convention of the Mexican Institute of Finance Executives (IMEF), 2021, argued that the origin of the increase in inflation is external.
In the Governing Board we know that we are not going to undo external inflation with instruments of internal policy. But what we can do is avoid generating contamination in price formation and the so-called second-round effects.
“By tightening monetary policy we help manage the shock so that the economy and markets assimilate it with the greatest possible order. And this is what Banco de México has done so far ”, he argued.
The central banker clarified that second-round effects occur when prices that do not affect the costs of their inputs are revised upwards simply because of the bullish environment.
In what was his last participation as governor in the IMEF convention, since he is 43 days away from ending his responsibility in the bank, he acknowledged that “the correction of fiscal and monetary policy in advanced economies will cause pain.” And that is precisely why they are gradually managing it.
“If later on it will be more complex or challenging, because the Fed has already raised the rate and Banxico has not, it will be a problem that must be evaluated in due course. Not solving today, because the context may worsen tomorrow implies taking risks, which we have already seen in the past ”.
Reference-www.eleconomista.com.mx