Bank of Mexico sees inflation shocks easing

CDMX | Bank of Mexico’s governing board agreed that some of the shocks impacting inflation have shown signs of easing, though more interest rate hikes are possible as core inflation trends higher, minutes from the bank’s Nov. 10 monetary policy meeting showed Thursday.

Banxico, as the Mexican central bank is called, hiked its key interest rate by 75 basis points to a record 10.00% at its last policy meeting, in a split decision that left the door open to future hikes but cast doubt on how aggressively it would continue its monetary tightening cycle.

“All members agreed that some of the shocks that have affected inflation have shown signs of easing and pointed out the lower pressures on supply chains,” the minutes said.

Banxico’s five-member board also pointed out the impact that L.P. gas prices have had on declining non-core inflation.

Still, most members highlighted that short-term inflation expectations had increased.

“With respect to upward risks to inflation, most members highlighted the persistence of the core component at high levels,” the minutes said.