“What should weigh most is the underlying inflation,” Julio Ruiz, an economist in Chief of Citi Mexico, said in an interview. “The market is a little more cautious that it can go down until the end of the year.”
For Citi analyst, carrying the reference rate to 7.5% is to take it to a neutral territory due to the rate differential that exists with the Federal Reserve.
If the underlying inflation does not yield, the Central Bank could pause in the cuts before resuming them in 2026.
“The current environment requires prudence in the management of monetary policy,” said the Financial Group VE for more (BX+). “Despite the low economic dynamism, the underlying inflation has exceeded 4%, and its panorama is atypically uncertain.”
The underlying inflation, which includes goods and services is accelerating because the international prices of raw materials have seen an increase from the pandemic, according to Ruiz.
“Inflation of services should be slowing much more clearly, especially if we take into account that you have a relatively weak activity,” he said.
But a low unemployment rate, as well as relatively high nominal wages, have been another of the reasons why services maintain pressure in their prices.
