“The Mexican economy faces a combination of unfavorable events: persistence of supply shocks on the Global economy, high prices of the raw MaterialsY weakening of the domestic demand given the need for a greater monetary restriction to bring down high inflation”, highlights the report prepared by Alfredo Coutinodirector for Latin America of Moody’s Analytics.
The analyst points out that with high inflation, the Bank of Mexico (Banxico) sees the need to “squeeze” the monetary politics and take the rate to restrictive territory. Analyst surveys indicate that the reference rate could end at historical levels of 9.5%.
The fact that Banxico raises its rate to that level will have as a consequence a depressed demand that will weaken the behavior of the economy.
Mexico will emerge from recession in the first quarter of 2024, Moody’s reported, as will the US economy and the recovery of the economy and the return of inflation to the central bank’s target will occur until 2025.
