Banxico must continue raising the rate to bring inflation to the target: OECD

The Organization for Economic Cooperation and Development (OECD) suggests to Bank of Mexico continue raising the rate to finish anchoring inflation expectations that will help slow down inflationary pressure.

According to the organization’s economist for Mexico, Alberto Gonzalez Pandiellathe upward trend in the rate will have a much more visible impact in the coming months and that is why a restrictive policy sustained for a longer time is required.

At a press conference to present the OECD Economic Outlookexplained that the wide openness that characterizes the Mexican economy is the factor that today has Mexico most exposed to external inflation shocks.

He recognized the measures applied by the government to mitigate the pressure of energy and food prices, but warned that when considering the response of the Bank of Mexico, a window of opportunity opens for the authorities to redirect economic support to households and companies that need it most, at a lower fiscal cost.

Later, in another online conference, OECD senior economist Alvaro Pereira explained that food inflation puts significant pressure on poorer families in the region. And it is a risk factor for social discontent, which should be taken into account by the authorities to help them soften the impact.

The OECD raised its growth expectation for Mexico to 2.5% this year from the 2.1% it expected in September and admits that a slowdown in GDP will come by 2023, which will be located at 1.6 percent.

This performance incorporates the impact of the weakening of activity in the United States, which will register 0.5% of GDP. The economist for Mexico stressed that they completely rule out a US recession and a global contraction.