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MNI BRIEF: Banxico-Upside Inflation Risks, Espinosa Chides Cut

(MNI) BRASILIA

Deputy governor Espinosa is worried about market inflation expectations that still exceed the central bank's own forecasts, minutes show.

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Central Bank of Mexico board members agree inflation risks are tilted to the upside, particularly in services, as deputy governor Irene Espinosa highlighted market expectations for higher inflation than its official forecasts in her decision to vote against the first rate cut in since February 2021, minutes released Thursday showed.

"The fact that markets anticipate that inflation will be higher than our forecasts indicates that is premature to begin reducing monetary restriction. Doing so could jeopardize the convergence of inflation and thus the credibility of this central bank’s commitment to its primary mandate of price stability," Espinosa said in the report, adding that the Mexican economy is still resilient and global inflationary pressures persist.

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Central Bank of Mexico board members agree inflation risks are tilted to the upside, particularly in services, as deputy governor Irene Espinosa highlighted market expectations for higher inflation than its official forecasts in her decision to vote against the first rate cut in since February 2021, minutes released Thursday showed.

"The fact that markets anticipate that inflation will be higher than our forecasts indicates that is premature to begin reducing monetary restriction. Doing so could jeopardize the convergence of inflation and thus the credibility of this central bank’s commitment to its primary mandate of price stability," Espinosa said in the report, adding that the Mexican economy is still resilient and global inflationary pressures persist.

Keep reading...Show less