Why is it expected that Banxico will not change its rate despite the price increase?

 Why is it expected that Banxico will not change its rate despite the price increase?  - The financial

Inflation in Mexico’returned’ in November and stood at 4.32 percent, according to the National Institute of Statistics and Geography (Inegi).

Due to this data, there is doubt whether the Bank of Mexico (Banxico) will raise the interest rate despite the rebound.

Gabriella Siller, director of economic analysis at Banco Base, said that despite the acceleration of inflation, it is expected that the Bank of Mexico will not ‘touch’ these rates.

The reason is that Banxico will start these cuts, but not until next year, that is, in the first quarter of 2024.

This is how inflation ‘returned’ to Mexico

In monthly terms, the National Consumer Price Index (INPC) showed an increase of 0.64 percent per month, which is the highest in 10 months.

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The data was below the 0.71 percent expected by analysts. The acceleration of prices occurred due to the non-core component, which increased by 1.81 percent in the monthly comparison.

Regarding core inflation, the increase was 0.26 percent. At an annual rate, it is 5.30 percent per year, the lowest level since October 2021, where it moderated for 10 months.

In essence, this is the reason for the rebound in the general level of prices: inflation is 1.43 percent annually, up from 0.56 percent last month.

Merchandise registered inflation of 5.3 percent, which means its twelfth month of decline, while services recorded a rate of 5.28 percent, up from 5.34 percent before October.

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The energy and tariff allowed by the government were 0.24 percent, down from a deflation of -0.35 percent.