The expert pointed out that for what is mentioned about the plan, it has political overtones and regretted that Banxico has not issued a statement or position on the matter.
The implicit message sent by the central bank is “negligence” in letting someone else do it. “There is no great commitment in the fight against inflation,” said the specialist.
Adrián de la Garza, chief economist at Citibanamex, commented that until the details of the president’s plan are released, it will not be possible to know exactly if the measure runs counter to the central bank’s task.
The specialist said that for the president’s idea to work, it must be accompanied by other support measures for companies, since price controls were also implemented in the 1980s, when there were other economic conditions.
“It seems difficult that with guaranteed prices – even when they are voluntary – inflationary pressures can be tackled,” he assured.
Alfredo Coutiño, director for Latin America at Moody’s Analytics, ruled out that the country’s president’s plan intends to take over the work of the entity governed by Victoria Rodríguez: “If Banxico sticks to its anti-inflationary mandate, then the government’s decision to limit some prices should not affect the work of monetary policy since the strategy does not represent an anti-inflationary plan because it does not attack the roots of inflation.
The specialist added that the central bank could contribute with advice and warn the authorities about the limitations of the strategy and, above all, the inconveniences and distortions that it may generate in the price formation system and in the functioning of the markets.
De la Garza considered that measures such as mitigating production costs, solving bottlenecks at the local level and work on economic competition should be the ones that complement the plan.
“Only in that way can we maximize the chances of succeeding in bringing down inflation in one dimension,” he said.
The director of Moody’s Analytics indicated that prices are going to accumulate lags while they are within the strategy, in such a way that when they are released they can jump virulently and with it the little that was gained during the period of price repression will be lost. . .
Expansión sought Banxico personnel to find out about their participation in the President’s plan without receiving a response at the close of this edition.
Headline inflation has been above 7% since November 2021; the data is at the highest levels in two decades.
Who fights inflation in Mexico?
The objective of the Bank of Mexico (Banxico) is to maintain inflation at 3%, but a grace range of one percentage point up and down is granted, that is, the target range goes from 2% to 4%.
The way in which the central bank keeps inflation in that range is with monetary policy, that is, by adjusting the reference rate, which currently stands at 6.5%.
Raising or lowering the reference rate has its pros and cons. At this time, with inflation above 7%, the Bank of Mexico must raise the rate. The problem is that with this increase, consumer loans also become more expensive. However, for those people who invest in government debt such as Cetes, the increase in the rate benefits them since they give them higher yields.
Article 28 of the Mexican Constitution says that “the State will have a central bank that will be autonomous in the exercise of its functions and in its administration. Its priority objective will be to ensure the stability of the purchasing power of the national currency, thereby strengthening the stewardship of national development that corresponds to the State”.
