Summary of Conferencia bancaria 2022: Banxico política monetaria

00:00:00 - 00:15:00

The Central Bank of Mexico (Banco de México, BdM) has announced plans to use monetary policy to combat inflation, which is expected to increase in both the short and long term. The BdM has forecast that interest rates will increase by 75 basis points by 2022, amid global pressure and the need for prudent action. However, the decision to adjust the exchange rate is based on the goal of reaching a reference interest rate in line with planned inflation target. The BdM will closely monitor inflationary pressures and take into account all factors that may influence the trajectory of inflation in the coming months. The BdM has taken measures to stabilize prices, such as raising interest rates and implementing restrictive monetary policy, but there is evidence to show that the economy in Mexico has seen a decline in growth.

• 00:00:00 In this section, the speaker discusses the current state of inflation in Mexico. They expect the inflation rate to continue increasing in both the short and long term, with estimates for 2022 and 2023 remaining optimistic, albeit with some margins increasing from the subyacente rate. However, the gasoline market is experiencing an important surge in prices. The speaker noting that unlike most countries, Mexico has a liberalized gasoline market. This results in local adjustments when the price of gasoline rises, which creates an indexation effect for inflation in gasoline prices. However, the federal reserve has taken steps to mitigate this effect by subsidizing gasoline prices using excess petroleum income, a move that has helped stabilize its projections. Despite the challenge posed by rising energies, commodities, and food prices, as well as the importance of the factor reserve, the speaker notes that the Bank of Mexico is expected to increase interest rates by several points in the coming months, amid global pressure and the need for prudent action.
• 00:05:00 In this section of the YouTube video "Conferencia bancaria 2022: Banxico política monetaria," the speaker discusses the Central Bank of Mexico's (Banco de México, BdM) projections for inflation and its plan to use the reserve fund to lower it to acceptable levels. The speaker suggests that the BdM's forecasts are reasonable, with the expectation that the Federal Reserve (Fed) will increase interest rates by 50 basis points this year, and the scheduled seven meetings will result in an additional 25 basis points. According to the speaker, even with high inflation and a rising dollar, it is unlikely that the BdM will remain inactive, as it tends to support conditions that lead to the agreement of en accordance with planned objectives. The speaker goes on to note that the BdM's decision to adjust the exchange rate is based on the goal of reaching a reference interest rate in line with the planned inflation target, which is currently set at 3% over the next period. The speaker suggests that this convergence may take time, and that the Fed's decision to use its reserve fund to decrease inflation is plausible. The speaker points out that the BdM's objective is to prevent the demand for foreign exchange from forming a growing queue. Therefore, the BdM will closely monitor inflationary pressures, taking into account all factors that may influence the trajectory of inflation in the coming months. In conclusion, the speaker believes that the BdM's decision to use the reserve fund to reduce inflation is a necessary step, considering the high inflation, the exchange rate appreciation, and the dollar availability. The speaker also warns about the importance of economic and financial market conditions in achieving this convergence, emphasizing the need to remain vigilant and open to changes if shocks occur elsewhere in the world.
• 00:10:00 In this section of the YouTube video, the speaker discusses the responsibilities and actions of Mexico's central bank, Banxico, in combating inflation. The speaker notes that Banxico has a responsibility to stabilize prices, and has been taking measures to achieve this, such as raising interest rates and implementing restrictive monetary policy, but acknowledges that choices made by the bank take time to make and can impact specific sectors of the economy. The speaker also notes that there is some disagreement within the bank on the best course of action, and that this can affect how the bank makes its decisions about monetary policy. Objectivo de la junta de gobernador es combatar la inflación y esa tarea la está cumpliendo de manera firme a través de una serie de decisiones tomadas desde junio hasta el presente, sin embargo la junta tienen una discusión con respecto al costo que puede tener una política restrictiva monetaria para el económico claro, usando el tipo de cambio y espectativas como canales de transmisión de políticas monetarias en México con lo cual en realidad para volver a ser relevante y importante en el caso particular de Méxicohas que hacer cosas entonces no realmente la economía, no tiene un impacto o una incidencia tan fuerte del crecimiento. The speaker also addresses the current recession in Mexico, highlighting that there is debate on whether it is a full recession or simply a divorce from the trend in the economy. The speaker notes that the debate centers around the third trimestre del año pasado which saw a decline in GDP, with the majority of the decline being attributed to changes in employment laws and not necessarily to a decline in the economy alone. The speaker also notes that despite some disagreement within the bank, there is evidence to show that the economy in Mexico has seen a decline in growth, and that this growth has been very moderated, with the 2021 being perceived as the country's economic motor and that during the year 2021 it received a high revisions to negative, which was a growth crisis.
• 00:15:00 In this section of the YouTube video titled "Conferencia bancaria 2022: Banxico política monetaria", it is discussed that the conditions for the implementation of monetary policy by the Bank of Mexico (Banxico) have tightened due to several factors, including the compliance of the Federal Reserve with certain requirements regarding the quantitative easing program and the acceleration of underlying inflation in the United States. This has put pressure on the entire Banxico board, and the decision to increase the interest rate was made by a 5-5 vote, which indicates the tightness of the conditions in this situation. It is also mentioned that the Bank of Mexico's president announced the monetary policy changes that were planned and programmed in advance at a press conference. However, there were criticisms about this move, as some argued that the president should have respected the secrecy of the bank and not have made the announcement in public. The president's decision to make the announcement early has caused confusion and speculation, and some believe that it may undermine the autonomy of Banxico. Additionally, it was commented that this incident has exposed the mechanism by which Banxico operates and the challenges that arise when making important decisions that affect the economy.