Bank Of Mexico

The Bank of Mexico has another weapon to fight inflation. Today the Bank of Mexico should decide on its reference rate. It will rise it before the increase of inflationary pressures? So far, nobody has agreed on the market about what can get to decide the Banxico. There are signs indicating that Banxico should increase its benchmark rate such as the possibility that rising prices extends to goods and services up to now foreign to the increases. There are other signs more ambiguous as reflected by the Instituto Mexicano of finance executives who warned that inflation in Mexico could reach more than 5%, and at the time that revised downward their expectations for economic growth of 2.8% to 2.5% for this year and to think that a few weeks ago, Felipe Calderon suggested that the Bank of Mexico should see the possibility of reducing its benchmark rate to encourage credit, as I commented in my previous article on Mexico. Of the foregoing, one one should ask what is wrong that Calderon seeks price with sectoral agreements? That beyond the ineffectiveness of them, is sending bad signals to the market in general and the investors in particular, showing an interventionist policy that may affect the profitability of the business and that is something that is not pleasing to the investing public. Why, if the Mexican Government aims to mitigate the effects of the escalation of prices, it could act more on the supply of goods, encouraging its increase (but not through a drop in rates to generate more credit) and through a policy of subsidies to the sectors most affected by the rise in inflation. I guess that also, the Government of Mexico is must regret having PEMEX in the current situation, which hinders him to the State oil company, leveraging the international boom and mitigate the impact of higher costs of energy inside. We will meet again tomorrow, Horacio Pozzo original author and source of the article.