Inflation in the United States slows at a slow pace

In Mexico, a mild recession is expected in 2025

With information from Verónica Reynold and Yazmín Zaragoza

The Federal Reserve of the United States (FED) continues to face inflation that is slowing down at a sluggish pace to reach its target of 2 percent.

According to Manuel Sánchez González, former member of the Board of Governors of the Bank of Mexico, the priority in the neighboring country’s monetary policy will be to lower the inflation level before cutting its benchmark interest rate.

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U.S. inflation was at 3.4 percent annually in April, while the benchmark interest rate is currently between 5.25 and 5.50 percent. Although the U.S. central bank has been very cautious about possible cuts, they are expected to happen, though not in the short term, he noted.

“It doesn’t mean that they won’t lower rates, it’s likely to take longer than markets and analysts are anticipating,” he commented during his participation in Norte Económico, of Grupo Financiero Banorte.

According to the former deputy governor of Banxico from 2009 to 2016, the Fed’s decisions are based on four reasons: first, there are no social pressures to start relaxing monetary policy.

Second, the 2.0 percent inflation target is taken very seriously because they have experienced a quarter-century of price stability; third, the Fed wants to act prudently; and fourth, it seeks decisiveness.

“It doesn’t want to make a rate cut and say, ‘we’re not starting a downward cycle.’ It wants to have evidence that inflation is on a sustainable and reliable path towards the target, and therefore, it’s not just going to be a move,” he argued.

In Mexico, a mild recession is expected next year

Regarding the economy in Mexico, Gabriela Siller, Director of Economic Analysis at Banco Base, explained to El Heraldo de México that despite the slow progress of the economy, “this does not mean a technical recession, it is rather an economic slowdown that is worrying because it occurs in an election year when the economy tends to grow more.”

However, she considered that as a result of this economic slowdown, "a mild recession is expected next year.”

Additionally, the National Institute of Statistic and Geography published the Global Indicator of Economic Activity (IGAE) for March, which showed a growth of 0.3 percent, which, according to analysts, also revealed a slowdown after having grown at an annual rate of 1.53 percent in February.