It will take more than a semester for inflation, both locally and globally, to return to its target level, which will directly impact the decisions that central banks make regarding the course of the interest rate in the following meetings, as the specialists consulted considered. .
In an interview for El Economista, Victor Ceja, Chief Economist at Valmex, pointed out that in the next announcement on September 29, Banco de México (Banxico) will raise the rate by 75 basis points and will continue with more moderate increases for the last two monetary policy announcements and close this year at 10 percent.
In such a way that he considered that there will be three main factors that will be driving said increases.
“First, Banxico will be attentive to what the United States Federal Reserve does, the markets are discounting that in the next announcement the US central bank will raise 75 base points, then on November 2 it will rise 50 points and on December 14 it would be raising another 25. points, with this its interbank rate would reach 4 percent”, said the specialist
“Secondly, Banxico is also attentive to the behavior of inflation, in particular the trajectory of core inflation, which has remained on the rise. And the third factor is the expectations of inflation in the medium term and the central bank is concerned that they remain high, currently it stands at 3.8%, above Banxico’s goal.
For his part, Ramsé Gutiérrez, co-director of Investments at Franklin Templeton Mexico, agreed that by the end of the year the interbank interest rate in the country will be between 9.5 and 10 percent.
“If the Fed raises rates, Banxico will have to raise them as well, both to contain inflation and to maintain the attractiveness of continuing to invest in Mexico and help the exchange rate not depreciate.”
Regarding inflation, specialists consider that despite the fact that in the General Criteria of Economic Policy 2023, it is estimated that by the end of the year the indicator will close 7.7%, this is optimistic, even lower than the bank’s estimate. central, consensus and Valmex.
“The realistic thing would have been for the consensus to be taken into account: levels slightly above 8 and 4% for this year and the next. Valmex estimates 8.5% for 2022 and 4.7% for 2023”.
Likewise, the Franklin Templeton specialist pointed out that the great challenge at a local and global level is to contain inflation and prevent it from continuing to affect the markets.
“The problem that worries central bankers the most is because inflation in social terms affects people with less money more than people with more money, which generates more imbalances not only for this generation but is inherited for the following ones. generations,” he said.
“If we add to this that at the local level there are factors that prevent it from going down so fast, such as the rise in gasoline prices, coupled with a new increase in the minimum wage, this will have an effect on inflation.”
Regarding the Gross Domestic Product (GDP), Valmex’s Chief Economist indicated that by the end of the second half of 2002, the Mexican economy will have less dynamism as a result of the increase in interest rates and inflation.
In such a way that the macroeconomic scenario proposed by the Ministry of Finance and Public Credit in the Income Law and the Expenditure Budget of the Federation 2023 is optimistic.
“In these numbers, we are particularly struck by the estimated economic growth of 3% for 2023, which we consider very optimistic, unrealistic, given the environment of global slowdown and, in particular, for the United States. Treasury assumes that the US economy will grow 1.8% next year, and the market consensus tends to be close to 1%, with a downward bias. they point out
”The average growth estimated by analysts for the Mexican economy for 2023 is 1.3% and our estimate is lower, 0.7%; there are even estimates of zero growth. The discrepancy is due to whether or not one is more pessimistic about the slowdown in the US economy.
Finally, Ramsé Gutiérrez indicated that as a consequence of the previous scenarios, the attractiveness of investing in cetes has been increasing mainly due to three factors:
It is the investment instrument with the lowest financial risk. This is more relevant in years like the current one where the volatility of the markets has been very high.
Cetes rates have exceeded the threshold of 10% at 1 year, levels not seen since 2005. If inflation expectations for the next 12 months were met, it would imply a real rate (above inflation) of 5%.
So far this year, Cetes are positioned as the best category and with prospects that favor them in an environment of greater monetary restriction in the coming months.
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