Economists consulted by Expansión explain that, with a single mandate, it would be expected that the law will be complied with 100% of the time, but this 42% in effectiveness is not bad either.
“From the point of international finance, it is considered a successful bank even if it is 40% of the time,” said Iván Franco, founder and director of the consultancy Triplethree International.
Although in the past it has been put on the table whether the inflation target should change, executives of Bank of America Securities (BofA) consider that this discussion in Mexico is settled for the moment: Banxico must make more efforts to keep inflation at 3% .
Carlos Capistrán, economist for Mexico and Canada at BofA, advises looking at the periods in which inflation has gone beyond the target. The first episode in which inflation got out of control for Banxico was in 2008 and 2009, when there was the subprime crisis.
The second episode was in 2017 when they were triggered by oil shocks and the last period is the one we are currently experiencing, after the covid-19 pandemic.
“In recent years – from 2000 until before the pandemic – China pushed prices down and central banks more or less achieved their objectives but that world is over. As production comes to Mexico and other countries come – because it’s more expensive to produce in China – it’s going to be more difficult and central banks are going to have a harder job,” he said.
The new structure in Banxico
With the possible arrival of Omar Mejía to the Governing Board and the background of Victoria Rodriguez, who did not have experience in monetary policy, Capistrán said that these profiles are not of concern to investors because the central bank maintains its structure.
“Investors have already seen that this administration has sent people to Banco de México who do not have the experience that previous Boards had and even so the independence of Banco de México has not been broken,” he said.
Despite this, there are second-order concerns because inexperienced people arrive and it will take longer for them to make better decisions.
This point of view is shared by Iván Franco, who adds that newer members have to increase their learning curve to prevent inflation from lasting longer.
