Shocks that have affected inflation have shown signs of mitigation: Banxico

The Governing Board of Bank of Mexico considered that some of the shocks that have affected inflation in recent months began to show signs of mitigation even as the underlying index remains depressedaccording to the minutes of their most recent monetary policy meeting.

In early November, Banco de México raised the reference interbank rate by 75 basis points to take it to a historical maximum of 10%, in its twelfth straight rise, and said that it will assess the magnitude of future increases according to the prevailing circumstances.

“All (the board members) agreed that some of the shocks that have affected inflation have shown signs of mitigation and pointed out the lower pressures on supply chains”, highlighted the minutes of the meeting released on Thursday.

Earlier it was revealed that headline inflation in Mexico slowed more than expected during the first fortnight of November to 8.14% at the interannual rate, notwithstanding the underlying index continued to advance at 8.66%a level not seen in just over 22 years.

Even so, the members of the Board reiterated that going forward Banxico will assess the magnitude of upcoming increases in interest rates according to the prevailing circumstances.

In a dissenting vote, the deputy governor Gerardo Esquivel pointed out the need to begin to reduce the rate of increases to the key rate. ”

This would indicate that we are approaching the terminal rate of the cycle, and would be consistent with the current balance of risks,” he said.

Regarding the economic performance of the Latin American country, which is struggling with the weak growth prospects of its main trading partner, the United States, the Bank of Mexico highlighted that the slack conditions continue to decrease.

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The Gross Domestic Product grew 1% between July and September, spinning four consecutive quarters of expansion, showed preliminary seasonally adjusted figures released at the end of October. The final GDP data will be published on Friday by the statistics institute.

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