Rates and inflation until 2023 and beyond…

The inflationary issue, and with it the rise in interest rates, is one of the most complex problems not experienced in the last 40 years, says the deputy governor of the Bank of Mexico, Jonathan Heath.

It is true that this situation is the result of many factors that affect the irruption of the supply chain, the change in household diets, and a shock in the supply and demand of the countries.

And although this problem will eventually be solved, the reality is that it will not be this year or the first half of 2023.

Non-core inflation has nothing to do with monetary policy, the underlyings are prices due to the interaction of supply and demand and are susceptible to monetary policy and these do not yield, they continue to rise, affecting the direct economy of Mexicans .

And although it is true that we have barely a month of having a restrictive policy in line with the economic situation, Banxico still cannot relax the issue, and it is expected that it will continue advancing to 10.75 points this year, and even reach 11 points in 2023, and leave it for a long time, that is, until you see consistently downward inflation.

There are many risks on the global and local horizon. The arrival of unanticipated shocks, security elements, lack of competitiveness in many sectors of the economy that affect prices upwards, sending a bad signal for businessmen, are issues that, according to the deputy governor of Banxico, are red flags for monitor.

What to say about salary increases. So far there have been no problems, but in the short term it could be a problem that could translate into more layoffs. Hence, it should be addressed from now on.

And although there are many signs that global inflation may begin to subside, given that the commodity index managed by the IMF has already begun to drop, as has the energy index, the calculation is that in November and December we will see upward inflation, and that it will not be until after the first quarter of 2023 when we begin to see a downward trajectory.

A very fragile and delicate process. The internal decisions of each country will also determine the trajectory of the local economy.

For now, the outlook for the business sector is to remain attentive to decisions, so that there is greater legal certainty, certainty and an environment that allows for greater security. Otherwise, 2023 will be a year of maintaining conditions as before, at best, leaving investments for later.

More when the closure of this government began, and history has taught us that, in that period, the economy falters and insecurity rises. Two elements that do not benefit anyone and that are getting worse from now on.

It will be necessary to closely follow the coordination and decisions that are taken at the end of the year, because it depends on it that the fall in the economy reaches us with greater force.