Mexico | Is the monetary stance in Mexico appropriate?

A year ago, with data at the end of 2022, general inflation in Mexico was (measured at an interannual rate) 7.8%, while core inflation was 8.4%.

Key points

• Key points:
• Now, with data at the end of 2023, general inflation is 4.7%, while core inflation is 5%.
• On the other hand, at the beginning of 2023, general inflation in the United States was at 6.4% and core inflation at 5.6%, while these variables are now at 2.3% and 2.6%, respectively.
• While the real monetary policy rate was 5.3% a year ago, it is now at around 7%.
• Thus, today, we find ourselves in a much more favorable environment with lower inflation (both general and underlying), lower inflationary expectations, and lower inflationary pressures from abroad, but with a monetary stance that is more restrictive than it was a year ago when The variables above appeared adverse. This is a situation that I believe suggests that there is room to begin to lower the monetary policy rate.

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