Mexico Central Banker Heath Advocates for Extended Benchmark Rate Hold

MEXICO CITY – In an interview released on Wednesday, Jonathan Heath, deputy governor of Mexico’s central bank, stated that the nation’s benchmark interest rate should remain at its current level for an extended period.

Heath, speaking in a podcast with Banorte, highlighted that while core inflation is gradually approaching the central bank’s target, there remains a necessity to maintain high rates.

As the only dissenting member in last month’s monetary policy decision, Heath voted to keep the rate at 10.75%, while the majority opted for a reduction to 10.50%.

In recent economic developments, Mexico’s annual headline inflation decreased to 4.66% in the first half of September, marking a continued decline for four consecutive fortnights. Core inflation also eased to 3.95%, reaching its lowest point since early 2021. The central bank’s inflation target is set at 3%, with a tolerance of one percentage point in either direction.

Heath emphasized the necessity of addressing persistent services inflation. He noted that if inflation continues to decline in the fourth quarter of this year, it could signal a movement toward normalizing monetary policy.