Mexico’s Inflation Slows
Mexico’s inflation rate has been slowing down, giving the central bank, Banxico, the opportunity to consider ending its rate hikes. The country’s consumer prices rose 4.45% in April, which is the slowest rate since October 2020.
Banxico’s Response
Banxico has been raising interest rates since August 2020 in an effort to combat inflation. The central bank has increased the rate by a total of 4.25 percentage points since then. The most recent hike was in March, when the rate was raised to 5.25%.
Banxico has indicated that it is now considering ending its rate hikes. The central bank said in a statement that it will continue to monitor the inflation rate and make adjustments to its monetary policy as needed.
Factors Affecting Inflation
The slowdown in inflation is due to a number of factors. The most significant factor is the appreciation of the Mexican peso against the US dollar. The peso has gained more than 10% against the dollar since the start of the year. This has helped to reduce the cost of imported goods, which has in turn helped to keep inflation in check.
Other factors that have contributed to the slowdown in inflation include lower energy prices and a decrease in demand for certain goods and services. The government has also implemented measures to reduce the cost of certain goods and services, such as electricity and gasoline.
Inflation Target
Banxico has set an inflation target of 3%, with a tolerance range of 1%. The central bank has said that it expects inflation to remain within this range in the coming months.
Economic Growth
The slowdown in inflation has been welcomed by economists, who believe it will help to support economic growth. The Mexican economy is expected to grow by around 3.5% this year, which is an improvement on the 2.5% growth seen in 2020.
Outlook
The outlook for Mexico’s economy is positive, with the country expected to benefit from the global economic recovery. The government has also implemented a number of measures to support the economy, such as tax cuts and increased spending.
The slowdown in inflation has given Banxico the opportunity to consider ending its rate hikes. The central bank will continue to monitor the inflation rate and make adjustments to its monetary policy as needed. If inflation remains within the target range, then the central bank may decide to end its rate hikes and focus on supporting economic growth.