The 3% inflation target would be reached by mid-2023: Governor of Banxico

On Thursday, the Governor of the Bank of Mexico (Banxico), Victoria Rodríguez Ceja, considered that inflation will continue to rise in the coming months, but, she said, it is expected to start falling towards the third or fourth quarter of 2022, until it reaches the level of 3% by mid-2023.

During her appearance before the Finance and Public Credit Commission of the Senate of the Republic, to respond to the actions of the central bank during the last months in which she has served as governor of the body, Rodríguez Ceja acknowledged that beyond the COVID-19 pandemic that has generated a deterioration in the economy and the conflict between Russia and Ukraine, what worries him most is the core inflation - which eliminates the most volatile prices - which will continue to rise in the coming months.

However, he said that “core inflation is expected to increase still in the coming months and that it will then fall to its 3% level by mid-2023. So the balance of risks for inflation has deteriorated and remains on the rise,” he said.

Before the legislators, Rodríguez Ceja stressed that one of the tasks of Banxico is to try to give stability to the weight.

“At the current juncture, the world's central banks, including the Mexican, face the most difficult juncture of the last four decades, the COVID-19 pandemic involved a global shock, as the health lockdown disrupted the global functioning of logistics supply chains in multiple sectors, at the same time For a long time, governments and central banks implemented significant fiscal and monetary stimuli in order to support both the liquidity of the financial system and aggregate demand in conditions that employment suffered a significant reduction,” he stressed.

He stressed that in the face of such complex price dynamics, the Banco de México's commitment to protect the purchasing power of the national currency is ratified, ensuring that the central bank will act in a timely manner so that inflation reaches the 3% target.

That is why, he assured, the central bank works to fulfill the Constitutional mandate of ensuring price stability, by implementing a prudent and timely monetary policy.

Proof of this is that since June 2021, Banxico began to raise its benchmark rate to help contain the inflation rate, so the reference rate has increased from 4% to 6.5%. However, inflation has not stopped its upward trend.

He acknowledged that the challenge for Mexico is to control inflation, which is complicated by the normalization of monetary policy in several developed countries, mainly the United States.

“On March 15, the United States Federal Reserve (Fed) decided to increase its federal funding target by 25 hundredths; this and the comments of officials from that institute allow it to project that country's interest rates will have successive increases in the remainder of 2022, increases will be higher and faster than anticipated, (which which will be an additional challenge for Mexico,” he said.

Among the participants in the Finance Commission were PRI's Nuvia Mayorga, Claudia Anaya and Jorge Carlos Ramírez Marín, the pianists Gina Andrea Cruz and Víctor Fuentes, the Morenoists Ifigenia Martínez and Jaime Bonilla, and the Plural Group, Gustavo Madero; among others.

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