Inflation Projections for January: Proceeding with Caution
Jonathan Heath, the deputy governor of the Bank of Mexico, stated that the overall and core inflation in the country is expected to remain below 4% in January, according to remarks he made in an interview with the newspaper Excélsior published on Monday.
Heath noted that, regarding the upcoming monetary policy decision for February, the context will be very different from what was previously anticipated, due to potential actions that U.S. President Donald Trump could take, who will assume office later that day and has warned about the possibility of imposing tariffs on imports from Mexico. "I believe our goal is truly to bring inflation down to 3.0%, without being overly restrictive, but we will be more cautious, gradual, and prudent, as there are several challenges and risks in 2025, starting with Donald Trump," he expressed. "For now, it’s crucial to be very careful... there’s no rush," he added. "At least for the February decision, we will need to monitor what Trump's actions will be, because it could be that we lower (the interest rate) too quickly and then have to reverse or change direction," he continued. In its last monetary policy meeting in December, where it reduced the benchmark interest rate by 25 basis points to 10%, the Bank of Mexico mentioned that the inflationary environment is expected to ease credit costs, and that with the progress in disinflation, more significant adjustments could be considered in some upcoming meetings. In December, Mexico's overall inflation was 4.21%, the lowest since February 2021, while core inflation stood at 3.65%.
It’s important to remember that controlled inflation is key to economic growth. Keeping it under control not only benefits citizens' purchasing power but also instills confidence in investors and strengthens the country's stability. The economic situation in 2025 will be influenced by multiple factors, including political decisions on the international stage, so authorities will need to act carefully and with foresight.
