Mexico’s Core Inflation Is ‘Looking Grave,’ Banxico’s Heath Says

Mexico central bank board member Jonathan Heath sounded the alarm about accelerating core inflation, saying in a series of tweets that the situation “looks grave” and may signal a structural problem, Bloomberg News reported. Even though annual inflation at the end of 2021 was marginally slower than in November and even slower than analyst forecasts, it isn’t good news because core prices are rising faster, Heath said. The annual core figure stood at 6% in the last half of December. It “signals the persistence of a more inertial or even structural problem,” Heath said in one Twitter post. Heath’s hawkish tone will be watched closely by economists who are forecasting whether the central bank will keep raising borrowing costs by 50 basis points, or return to quarter-point hikes, as one survey suggests. Banxico, as the central bank is known, unexpectedly accelerated the pace of monetary tightening earlier this month, raising rates by half a percentage point to 5.50%. Inflation slowed to 7.36% in December from 7.37% the previous month, data released Friday showed, but remained at more than double the bank’s target of 3%. Read more.