The Mexican central bank’s Deputy Governor Jonathan Heath indicated that the bank may refrain from additional interest rate reductions because of rising inflation rates.
The annual inflation rate exceeded the Banxico target range of 3% plus or minus one percentage point during May according to Heath in his interview with El Economista. According to Heath the inflation increase appears to be short-term in nature.
The inflation rate will continue its downward path during the upcoming months according to Heath.
The central bank of Banxico faces a decision about its June interest rate cut because inflation remains high. The market closely observes price increases to determine if they represent a short-term fluctuation or the beginning of sustained inflation patterns.
The upcoming decision of the bank will determine the direction of Latin America’s second-largest economy because policymakers need to manage inflation while supporting economic expansion.
