In December, the inflation figure was 4.21%, due to a greater than expected drop in the prices of fruits and vegetables. In addition, monthly inflation was lower than the historical average.
Paulina Anciola, deputy director of Economic Studies at Banamex, said in an interview that the expectation that Banxico will make two 50-point cuts is because the central bank is worried about having an overly restrictive stance.
“Several members mention that the real ex-ante rate is at levels well above neutral and that it is no longer in line with what we are seeing in terms of inflation and economic growth,” Anciola said. “Inflation is giving them room to start cutting before economic activity worsens.”
For the economist, Banco de México will prioritize the slowdown of the economy despite the fact that Donald Trump’s tariffs generate inflationary effects.
Banamex estimates that the Mexican economy will have marginal growth of 0.2% in 2025.
Alejandro Saldaña, chief economist at Grupo Financiero Ve por Más, believes that Banxico should be more prudent in the cuts it makes to the interest rate.
For the expert, reducing the reference rate by 50 points in an environment in which inflation is still far from the target would cause a credibility problem.
“A credibility problem could be generated in terms of the central bank’s commitment to fulfilling its mandate and an even greater depreciation in the exchange rate could also be generated,” he highlighted.
Rate dependent on economic slowdown
With a slowing economy, service inflation may benefit, experts agree.
“If a low rate of economic growth is also observed in 2025, this should reduce pressure on this component of services,” said Saldaña.
The expert highlighted that the pressure that services will have has to do with increases in the minimum wage.
“Every time we increase the minimum wage, the rest of the salaries will also be a little more likely to be infected and that phenomenon will prevent service inflation from falling too much,” he added.
