The autonomy of the BdeM is not at risk: Heath

The autonomy of the Bank of Mexico (BdeM) is not at risk with the arrival of Claudia Sheinbaum Pardo to the presidency of the Republic, assured Deputy Governor Jonathan Heath Constable.

I do not believe that this change in administration will change the perception of the work that the bank has done, the economist said while participating in a forum organized by the Mexican Institute of Financial Executives (IMEF).

Heath Constable said the institution’s autonomy was well protected and insulated from many pressures, as the federal administration had understood the role it played.

The government itself realized the importance of maintaining autonomy and that there are many more benefits than if they tried to change or modify it.

He commented that when the central bank lacked autonomy, inflationary outbreaks reached triple digits and in the most recent case it reached a maximum of 8.7 percent (in September 2022).

In another era, if inflation had dropped to 8.7 percent we would be celebrating. The scale of the problem has changed radically.

Heath Constable commented that the institution is not losing credibility, as it is one of the most solid institutions in the country.

One can boast of its solidity, its history, its trajectory, its human capital. We have the best economists and financiers in the country… I believe that it is an extremely solid institution of which we can be extremely proud, especially this year when we celebrate 30 years of autonomy and next year when we will celebrate 100 years of the existence of the central bank.

The deputy governor commented that factors such as insecurity in the country and natural events such as drought are other structural effects that put pressure on prices.

“We are seeing these types of climatological issues, more droughts and more floods. growing upthere are more and more of them.

Problems of extortion and insecurity have also been increasing.

He believes that this is why prices will be affected, and this will happen more and more frequently. We could already talk about structural effects and not just temporary ones. When we have problems of lack of security and extortion, all of them must be combated.he assured.

Possible further cuts to the reference rate

The deputy governor said there is a possibility that the BdeM will soon make other cuts to the reference interest rate, but should be done with caution.

He added that this possibility will depend on the progress of inflation observed by the central bank’s governing board, although he noted that non-core inflation is rising, but this is a temporary behavior.

He noted that the underlying index, which determines the trajectory of general inflation in the medium and long term, is on the right trackbecause it keeps going down.