How could President Andrés Manuel López Obrador react to a more accelerated increase in interest rates in Mexico and a totally restrictive position in the message of the Governing Board of the Bank of Mexico?
Whatever your reaction to a possible increase of 75 basis points in the next monetary policy decision and a message to assume a restrictive position, hopefully none of the members of the Governing Board will be influenced by your way of thinking and acting.
It is good that there is this direct communication between López Obrador and the governor of Banxico, Victoria Rodríguez Ceja. It is good that they are meetings that are not hidden and it is good that the President himself notes that in his meetings to talk about “fiscal and inflation” issues they are with public officials and the autonomous Bank of Mexico.
Wonderful that he has given himself the task of repeating that as a mantra after his blunder of anticipating that interest rates would rise and thereby compromise the incoming governor.
As long as we are in this phase of unrelenting inflationary pressures, passive rates that remain negative, and inflation as the main problem facing the economy, it is very likely that there will be a consensus among the country’s fiscal authority, that is, the president López Obrador, and the monetary authority, that is, the Bank of Mexico.
But the time will come when, fortunately, the rapid increase in prices will be contained and interest rates will remain high. At that point, a discussion will begin about the speed of normalization of monetary policy and it is this type of discussion that usually confronts the Treasury, today the presidency, and the Bank of Mexico.
If we look at the indications that President López Obrador’s public policies have given us, we can place him ideologically on the side of the hawks.
He did absolutely nothing to ensure that the economy did not collapse in the way it did during 2020. He left millions of employees and companies to their fate without aid or encouragement.
But when the main concern turned to high inflation levels, he did not hesitate to put at the service of price containment the collection of a tax as important as the IEPS that is applied to fuels.
It sounded more progressive to support the lowest-income employees so as not to sink in the middle of the pandemic than to regressively subsidize motorists.
It seems something very neoliberal, but it also suggests that there should be no greater opposition in the morning to the Bank of Mexico taking charge with all its available arsenal to control inflationary pressures for several quarters.
It is a high cost for public finances to sacrifice the IEPS on gasoline, but it is a measure that has been effective so that inflation does not rise much more. It is seen that the President is on the side of the monetary hawks.
Inflation and Banxico
Homeless
In the fifth month of the year, inflation stood at 7.65%, a level above the 7.61% expected by the market.
The goal
Banco de México has an inflation target of 3% plus or minus one percentage point, which is why it has increased its reference interest rate since mid-2021.
major hikes
Central bank officials opened up the possibility of adopting a more significant rise in its rate than those made since the beginning of a restrictive cycle of 50 base points.
Televisa News Anchor
The great Depression
Degree in Communication Sciences from the National Autonomous University of Mexico, with a specialty in finance from the Autonomous Technological Institute of Mexico and a master’s degree in Journalism from the Anahuac University.
His professional career has been dedicated to different media. He is currently a columnist for the newspaper El Economista and news anchor on Televisa. He is the owner of the 2 pm news space on Foro TV.
He is a specialist in economic-financial issues with more than 25 years of experience as a commentator and host on radio and television. He has been part of companies such as Radio Programas de México, where he participated in VIP business radio. He was also part of the management and talent team of Radio Formula.
