Saturday, April 1, 2023

How will a recession in the United States affect Mexican monetary policy?

Gustavo Torres (Notipress)

Valmex reports 90% chance of recession in next 12 months

according to the investment fund operator Mexican Securities Brokerage House (valmex) is a 90% chance of recession for the United States and Mexicoheyover the next 12 months. in conference “Economic Expectations 2023”to which they had accessnoticepressChief Economist, Valmex Victor Cezareported that the US economic outlook would Effects on Mexican Monetary Policy, in which there is a possibility Banxico and FED sever tiesAs well as 50 basis point clipping in front of one inflation 4% and 2024.

third financial crisis consecutive records in the United States generated that federal Reserveof the country (FED) Interest rate hiked by 25 basis pointsin February. According to the Fed Chairman, Jerome PowellTo bring inflation pressure back to 2 per cent, more rate adjustments will be in the country’s outlook for this year.

On the other hand, with data from Fed Chicago,Valmex reported that the growth of the US economy closed at 2.1 percent, and national activity indicator It was negatively close to .70%. Out of 85 indicators considered by experts in Chicago, shows a negative margin of .70% economic downturn close to recession,

Regarding these figures and Powell’s statements, Victor Ceza indicated thatUS rates will not adjust for at least 6 months, However, if any recessionIn the Covered Period, it will be short duration and low depth,

For Mexico, the US approach will be decisiveMonetary policy adjustments made by the Banco de Mexico(Banksiko). In this regard the original cupwill be located at 5.5%, i.e. up two points restrictive criteria of the institution. “If Banxico continues to engage with the Fed, and adjust rates at a similar incidence and magnitude, the real rate in Mexico will be above 6 percent”Commented by the expert.

with data from National Institute of Statistics and Geography(INEGI), Valmex informed that Trade balance surplus reaches all-time high 984 million dollars. Furthermore, this deficit is part of a minor oil export platform I increase in oil importsactivity that represents 70% used gasoline in country,

According to the Economist, The conditions for introducing depreciation in the national currency are before the economic scenario; However, it maintains a strong exchange rate against the dollarin late 2022 with 19.50. The two main factors that drive the exchange rate are tourism And this Remittanceshe added.

On dispatch, President andres manuel lopez obrador (AMLO), thanks to a total income of 58 thousand 497 million dollars Remittances from compatriots in 2022, At the morning conference on February 1, 2023, executives announced that remittances had increased by 13% compared to 2021.

However, in front of trade with north america to the nearest, adjustment ofratesand the risk of recession Maintaining such a strong posture can be counterproductive in the long run., According to the Economist, this scenario assumes a Disadvantages for foreign participants with depreciating currencies in cases of exportand entrancefinancial income in country.

tell that before monetary policy with recession prospectsis the main factor maintaining Mexico’s economic stability Before taking over emerging and developed countries foreign investment, In the opinion of Valmex and the Mexican private sector, there is a Concern for the sustainability of public financesEspecially in the macroeconomic context.

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