In an interview with Excelsior on Monday, Jonathan Heath, Deputy Governor of Mexico’s central bank, predicted that core and headline inflation would drop below 4% by January.
He noted that the bank doesn’t need to enforce strict regulations, even as external economic factors could create pricing pressures.
Heath expressed optimism about inflation trends despite concerns over potential challenges from US policies under President Donald Trump.
Heath predicted that core and headline inflation would fall below 4% by January, with a long-term goal of reducing it to 3%.
Trump’s proposals, including tariffs on Mexican exports and mass deportations, could pressure Mexico’s economy and drive up inflation.
However, Heath remains committed to achieving economic stability, emphasizing,
We are dedicated to ensuring inflation remains under control and steadily declines.
In December, Mexico’s national inflation rate dropped to 4.21%, its lowest since October, though core inflation rose slightly to 3.65%.
Heath views these developments as progress, reflecting the central bank’s efforts to stabilize the economy.
The Bank of Mexico has adjusted interest rates to counter inflation while maintaining a balanced approach to avoid harming growth.
Heath stressed flexibility in tackling potential external challenges, saying,
Our priority is to monitor the situation closely and adjust strategies as needed.
Lower inflation benefits both consumers and businesses by stabilizing prices and enabling better financial planning.
However, risks remain, such as increased costs from US tariffs.
The central bank’s ability to manage these pressures will be critical in sustaining Mexico’s economic stability.
As 2025 begins, Heath’s optimistic outlook signals hope for a year of lower inflation and steady growth, supported by flexible and vigilant policymaking.
Bank of Mexico may consider larger rate cuts as inflation eases
The Bank of Mexico (Banxico) may increase the size of interest rate cuts in future meetings as inflation continues to decline, according to minutes from its December monetary policy meeting released Thursday.
In December, Banxico unanimously reduced its benchmark interest rate by 25 basis points to 10.00%. The minutes noted that “larger downward adjustments could be considered in some meetings,” while maintaining a restrictive monetary stance.
Three of the five board members supported discussing larger rate cuts. Since March, Banxico has implemented five 25-basis-point cuts, reducing the benchmark rate from its record high of 11.25% in 2023.
This shift reflects the central bank’s focus on balancing inflation control with economic growth.
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