ZCZC
BCN-25
MEXICO-BANK-ECONOMY-INFLATION
Inflationary pressure in Mexico may continue to rise: Bank of Mexico
MEXICO CITY, Aug. 3, 2018 (BSS/Xinhua) – Inflationary pressure in Mexico
may continue to rise in part due to uncertainty surrounding the renegotiation
of the North American Free Trade Agreement (NAFTA), the central Bank of
Mexico (Banxico) said Thursday.
In its monetary policy statement, Banxico said the Mexican peso could also
see pressure from higher international interest rates coupled with a strong
U.S. dollar.
“There is also a risk that U.S. foreign trade policy measures will lead to
an escalation in protectionist and retaliatory measures that adversely affect
inflation behavior,” the bank said.
“The risk balance with regard to the trajectory of inflation maintains an
upward tendency,” it added.
Mexico’s annual inflation rate was running at 4.85 percent through the
first half of July, according to the most recent figures available from the
National Institute of Statistics and Geography (INEGI).
The figure exceeded the bank’s inflation target of 3 percent, with a one-
point variation up or down.
Banxico said that since June, there have been signs of inflation that may
affect prices over the next 12 months.
What’s more, Banxico predicted that growth in the country’s economy could
fall in the lower portion of the expected range, between 2 and 3 percent.
“Faced with the uncertainty resulting from the complex environment that
the economy is facing, (growth) is considered to be on the downside,” Banxico
said.
In spite of the inflation risks, Banxico’s governing board decided on
Thursday to maintain the interest rate at 7.75 percent, which is the highest
level in nine years.
BSS/XINHUA/HR/1135