MEXICO CITY (Multibagger) - Mexican central bank deputy governor Jonathan Heath, in an interview published on Wednesday, said that the nation's benchmark interest rate should stay at its current level for longer.
Heath, in a podcast with bank Banorte, said that even though core inflation is coming toward the monetary authority's target, the need to keep rates high still persists.
The central bank board member was the sole dissident in last month's monetary policy decision, voting to hold the rate at 10.75% when the others moved to cut the rate to 10.50%.
Mexico's annual headline inflation slowed to 4.66% in the first half of September, its fourth consecutive fortnight of declines. Core inflation moderated to 3.95%, its lowest level since early 2021.
The central bank's inflation target range is 3%, plus or minus one percentage point.
Heath added that there was the need to break the stubbornness of services inflation.
If inflation comes down in the fourth quarter of this year, "then we could be on the path toward a normalization in monetary policy," he said.
**Analysis:**
Mexican central bank deputy governor Jonathan Heath believes that maintaining the current benchmark interest rate is crucial, despite the decrease in inflation. While core inflation is approaching the target set by the monetary authority, Heath emphasizes the importance of keeping rates high. As the sole dissenter in the recent monetary policy decision, where others voted to reduce the rate, Heath's stance highlights the need to address services inflation. The gradual decline in headline and core inflation indicators suggests a positive trend, with the potential for a normalization in monetary policy if inflation continues to decrease in the coming months. This could have implications for investors and individuals alike, impacting borrowing costs, savings rates, and overall economic stability.