IMF says Mexico’s inflationary pressures pose difficult balancing act

Please try another search

Economy20 hours ago (Nov 05, 2021 04:07PM ET)

MEXICO CITY (Reuters) – The International Monetary Fund (IMF) on Friday said Mexico’s recent inflationary pressures, while mostly temporary, pose a difficult balancing act amid still sizable slack in its economy.

“A credible medium-term tax reform, to be implemented as the economy strengthens, would help finance needed social and public investment spending and put the public debt to GDP ratio on a firm downward trajectory,” the IMF said in a statement.

Mexico’s annual inflation rate likely reached the highest level in almost four years in October while core inflation has reached its highest point since 2009, a Reuters poll showed on Friday.

In the context of the 2021 Article IV consultation with Mexico, the IMF’s directors recommended a gradual, data-driven pace of policy normalization that carefully balances support for the recovery while keeping medium-term inflation expectations well anchored.

Mexico’s economy shrank 0.2% https://www.reuters.com/world/americas/mexican-economy-shrinks-first-time-since-pandemic-rebound-2021-10-29 in the July-September period versus the previous quarter after a resurgence in the coronavirus pandemic dragged down service sector activity and disrupted global supply chains.

The contraction, Mexico’s first since a recovery began from the pandemic, poses a challenge https://www.reuters.com/article/mexico-economy-rates-idUSL1N2RP1ZN to the central bank’s monetary policy tightening cycle, but stubbornly high inflation appears likely to take precedence.

Annual headline inflation currently stands at 6.1%, double the Bank of Mexico’s 3% target rate.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.