How sustainable are these types of measures, mainly due to tax incentives for gasoline?
—This is a question for the Ministry of Finance. What the agency says is that right now it has profits from the increase in the price of oil, all those profits, due to the overpricing of what had been originally calculated, is being used to subsidize the price of gasoline and that, according to its calculations , more or less one is enough for the other.
Now, I have not made a personal calculation, it is simply the information that I have.
Banxico started raising the reference rate last year, how have the hikes helped contain inflation?
—We would have to have some counterfactual exercise that we do not have and it is very difficult to construct it.
I would say that, intuitively, if we had not started to increase the rate, we would have been sending the message that the Bank of Mexico does not care about the phenomenon of inflation, and that this would have had the effect of higher inflation expectations, so that the rates medium- and long-term interest rates could be above what we see right now.
After increases of 25, 50 and now 75 basis points, we are in the middle of the neutral zone, what we need to do is continue to increase the rate, so as not to have a neutral position, if not a restrictive one consistent with the inflationary panorama that we are observing, I do see the need to continue increasing the rate.
How can we combat inflation?
The first factor is our monetary policy, this must be consistent with the inflationary outlook, have a restrictive stance to contain expectations and try to contain inflation, not solve it; monetary policy alone is not enough for us, but it is what it is.
The second thing that helps is the Pacic with gasoline subsidies, instead of having an inflation of 11%, we have it at 8%, that does not solve the inflationary problem, but it helps to contain it.
The third and most important, but outside our side, is the monetary policy of the United States. Much of the inflation that we import comes from there, where it is above 9%, and the Fed maintains an expansionary stance, we need it to continue increasing its rate for a restrictive stance, this is a necessary condition, but not sufficient, for we can see a downward trend of inflation in our country. And not only from the Fed, it is a global effort, from all central banks, we need a global restrictive stance.
The last one, is something that I have baptized as patience and luck. We need luck because for inflation projections to come true, what we need is no longer to have unanticipated shocks, that’s where that element of luck comes in, hopefully we don’t have them, but we can never anticipate the future; if there is going to be another invasion of another country, or who knows what is going to happen.
Finally, the patience part, because I can assure you that sooner or later the inflationary rebound issue will be resolved, its initial cause, which was the disruption in supply chains worldwide, due to the pandemic, sooner or later. they are going to be solved, to be recomposed, the problem is that we do not know if this is going to take a long time, or a little, but what we do know is that it will eventually be resolved.
