Bank of Mexico Urged to Avoid Hasty Monetary Decisions

Deputy Governor Galia Borja of the Bank of Mexico urged caution in making hasty monetary policy decisions. Borja emphasized the need for careful assessment amid rising inflation and steady interest rates. She highlighted the importance of evaluating each situation thoroughly before enacting changes.

During a podcast interview published on Wednesday, Deputy Governor Galia Borja stated that it is prudent for the Bank of Mexico to avoid 'hasty decisions' concerning monetary policy.

Last month, the Bank of Mexico maintained its benchmark interest rate at 11.00%, despite persistent inflation in Latin America's No. 2 economy. The inflationary environment could permit future rate cuts; however, Borja emphasized, 'the most prudent thing from a cautious point of view is to wait a while and not make a hasty decision.'

Official data showed Mexico's annual headline inflation rate increased for the fourth consecutive month, reaching 4.98% in June, while core inflation fell for the 17th consecutive month to 4.13%. Borja admitted that Mexico's current monetary stance is 'undoubtedly restrictive' and aims to bring inflation toward the target over the forecast horizon.

Banxico targets inflation at 3%, plus or minus one percentage point. Borja, one of four members who voted to hold the benchmark rate, explained that the decision was necessary to gather more information about the factors influencing Mexican inflation. 'Each situation must be evaluated in due course, decision by decision, with all the information available - that's my opinion,' she concluded.