Banxico Presents 3Q22 Evaluation of the Economy and Inflation

The Bank of Mexico’s (Banxico) analysis of the Mexican economy for 3Q22 suggests that uncertainty in global markets and high inflationary pressures continue to present an unpredictable outlook for 2023. 

“The environment under which the Bank of Mexico has conducted monetary policy continues to be complex and uncertain. At the global level, inflation remained high, and a large number of central banks continued to increase their reference interest rates. Therefore, the conditions in international financial markets have tightened. Interest rates have tended to increase globally, exhibiting volatility, while the US dollar has continued getting stronger. In this context, prospects for global economic activity have deteriorated,” explained Banxico via a press release. 

Banxico explained that inflation continued to affect all countries, reaching peak levels not seen in decades that surpassed the expectations of central banks. Core inflation continues its upward trend. 

“In Mexico, economic activity continued to recover in 3Q22. Thus, [the country’s economy] was already located at levels like those of the fourth quarter of 2019, prior to the health emergency. Good performance in the quarter reflected the continuous reactivation of services and the upward trend that maintains the manufacturing industry. It anticipates that the Mexican economy will continue facing a weaker economic environment and a high global uncertainty,” explained Banxico. 

International markets continue to face major uncertainty due to the complex environment. Meanwhile, the peso-dollar exchange rate has remained stable despite the strength of the US dollar. However, short-term interest rates increased due to Banxico’s most recent decisions. Banxico’s board of governors agreed to set the overnight interbank interest rate at 75 basis points at recent meetings.