- The public safety and policies implemented by the United States are a source of concern for companies.
- The central bank warns of a slowdown that may deepen; It urges to increase investment amid weak demand and commercial tensions
Panco de Mexico (Pancico), Director of Economic Research, Alejandrina Salisidou Syseniros, said that uncertainty has a widespread impact on the country’s actions, and thus the perception indicates moderate expansion in regional economies, said Panco de Mexico (Pancico), Director of Economic Research, Alejandrina Salisido Ceseniros.
“We had a slowdown that we watch for several quarters, to which this uncertainty environment is exacerbated,” added the economist in Pancico. This may be due to the low internal and external demand, given that manufacturing production slows down in the United States (the United States).
The Central Bank in Mexico revealed an economic shrinkage of 0.6 % in the fourth quarter of 2024. Although the country is not in a recession, a quarter of a negative can be an introduction to a deeper economic slow.
Executive officials in the business that were interviewed by Pancico indicated that the deterioration of public policies and trade implemented by the United States is among the risks that may affect regional economies during the next year.
Also, general investment in infrastructure at government and federal levels may be less than expected.
It has been considered that in the face of these challenges, it is necessary to continue to enhance local growth sources and generate favorable conditions for investment, especially to continue to enhance the building of the infrastructure.
Pancico is common questions
Mexico Bank, also known as Pancico, is the central bank in the country. Its mission is to maintain the value of Mexico, Mexican Peso (MXN), and control of monetary policy. To this end, its main goal is to maintain low and stable inflation within the target levels – at or close to its 3 % goal, the center point in the tolerance range ranges between 2 % and 4 %.
The main tool for banknotes for monetary policy guidance is to determine interest rates. When inflation is higher than the target, the bank will try to tame it by raising prices, which makes it more expensive for families and companies to borrow money and thus cool the economy. The highest interest rates are generally positive for Mexican Peso (MXN) because it leads to higher returns, making the country a more attractive place for investors. On the contrary, low interest rates tend to weaken MXN. The difference in the average with the US dollar, or how Banxico is expected to determine interest rates compared to the Federal Federal Reserve (Fed), which is a major factor.
Pancico meets eight times a year, and its monetary policy is greatly affected by the US Federal Reserve decisions (Fed). Therefore, the Central Bank Resolution Committee usually gathered a week after the Federal Reserve. When doing this, Pancico interacts and sometimes expects monetary policy measures set by the Federal Reserve. For example, after the Covid-19 pandemic, before raising the federal reserve rate, Pancico was first trying to reduce the chances of a significant decrease in the Mexican Bzo (MXN) and to prevent capital flows that could shake the country.
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