Economy

Specialists expect historical rates for the end of the year

Specialists expect historical rates for the end of the year

It will take more than a semester for inflation, both domestically and globally, to return to its target level, which will directly influence the decisions central banks make about the interest rate path in subsequent meetings, the specialists consulted considered. .

In an interview with El Economista, Victor Sega, chief economist at Valmex, noted that in the upcoming announcement on September 29, Banco de Mรฉxico (Banxico) will raise the price by 75 basis points and will continue with more moderate increases for the last time. Two monetary policy announcements and they close this year at 10 per cent.

In this way, he considered that there would be three main factors that would drive the mentioned increases.

โ€œFirst, Banxico will be interested in what the US Federal Reserve is doing, and the markets are ruling out that in the next announcement, the US central bank will raise 75 basis points, then on November 2 it will raise 50 basis points and on December 14 it will raise another 25 points , bringing the interbank rate to 4 percent,โ€ the specialist said

Second, Banxico is also interested in the behavior of inflation, in particular the trajectory of core inflation, which has been on the rise. The third factor is the medium-term inflation expectations that the central bank fears will continue to rise, currently standing at 3.8% above Banxico’s target.

For his part, Ramsey Gutierrez, co-director of investments at Franklin Templeton Mexico, agreed that by the end of the year, the country’s interbank rate will be between 9.5 and 10 percent.

โ€œIf the Fed raises interest rates, Banxico will have to raise them as well, to contain inflation and to maintain the attractiveness of continuing to invest in Mexico and help prevent the exchange rate from depreciating.โ€

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inflation

With regard to inflation, specialists are of the opinion that despite the fact that in the general parameters of economic policy 2023, it is estimated that by the end of the year the indicator will close 7.7%, and this is optimism even less than the estimate of the Bank. Central, consensus and Valmex.

The realistic thing was to factor in the consensus: levels just above 8 and 4% for this year and the year after. Valmex estimates 8.5% for 2022 and 4.7% for 2023.โ€

Similarly, the specialist at Franklin Templeton pointed out that the big challenge at the local and global level is to contain inflation and prevent it from continuing to affect the markets.

“The problem that worries central bankers the most is that socially inflation affects people who have less money than people who have more, generating more imbalances not only for this generation but is inherited for future generations,” he said.

“If we add to this that at the local level there are factors that prevent it from declining too quickly, such as the rise in gasoline prices, along with a new increase in the minimum wage, this will have an impact on inflation,” he added.

Economic growth

Regarding GDP, the chief economist of Valmex indicated that by the end of the second half of 2002, the Mexican economy will have less dynamism as a result of the increase in interest rates and inflation.

In such a way that the macroeconomic scenario proposed by the Ministry of Finance and Public Credit in the Act on the Income and Expenditure Budget of the Union 2023 is optimistic.

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โ€œIn these numbers, we are particularly shocked by the estimated 3% economic growth for 2023, which we consider to be very optimistic and unrealistic, given the environment of a global slowdown, particularly for the United States. The Treasury Department assumes that the US economy will grow by 1.8% next year, and tend to Market consensus is close to 1%, with a downward trend

The average growth that analysts estimate for the Mexican economy for 2023 is 1.3% and our estimates are lower, 0.7%; There are even estimates of zero growth. This discrepancy is due to whether or not one is more pessimistic about the slowdown in the US economy.

Investments

Finally, Ramsรฉ Gutiรฉrrez indicated that as a result of the previous scenarios, the investment attractiveness of cities increased mainly due to three factors:

It is the investment tool with the least financial risk. This is even more important in years like the current one where market volatility has been very high.

Cetes rates have crossed the 10% threshold in 1 year, levels not seen since 2005. If inflation expectations for the next 12 months are met, that would mean a real (above inflation) rate of 5%.

So far this year, Cetes has been rated the best category and has odds of being favored in an environment with greater financial constraints in the coming months.

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