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Banxico recommends more certainty for investment

The Bank of Mexico (Banxico) recommended that the federal government give greater certainty for investment and accelerate the advance of vaccination against Covid-19.

From Banxico’s perspective, it is necessary to continue addressing the institutional and structural problems that for years have influenced low levels of productivity and capital accumulation in Mexico.

In addition, it is essential to promote conditions of certainty for investment and productive activity, and to strengthen the rule of law and the fight against insecurity.

This would support a more sustainable, expedited and generalized recovery of the Mexican economy and would help mitigate the more persistent adverse effects associated with the pandemic.

It would also lay the foundations for greater long-term growth, so that it is possible to create more and better jobs and provide greater well-being for the entire population.

Investment certainty

Despite the worsening of the pandemic that occurred in the country during the third quarter of the year, progress in vaccination allowed the effects on health and economic activity to be less than in previous waves.

However, according to Banxico, the pandemic continues worldwide and the risk of the emergence of more transmissible variants of the virus persists.

Therefore, maintaining efforts, both nationally and globally, to vaccinate as quickly as possible the largest number of people will continue to be a “key policy” to promote the recovery of economic activity, employment and the reactivation of investment.

For Banxico, this would also help mitigate the uncertainty surrounding the persistence of bottlenecks in supply chains, which have been longer than expected, putting pressure on global inflation and inducing episodes of adjustment and volatility in the international markets.

In this complex context, economic policy in Mexico, both in the fiscal and monetary spheres, must continue to strengthen macroeconomic fundamentals.

In this sense, the Governing Board of Banco de México determines its monetary stance in order to promote an orderly adjustment of relative prices, financial markets and the economy as a whole, leading to the convergence of inflation to the target of 3% and preserve the anchor of inflation expectations.

 

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