ACAPULCO, Mexico--Mexico's central bank chief Agustin Carstens said Thursday consumer prices might begin to ease by June, since recent inflationary pressures such as hikes in public transportation costs and climate factors are transitory.
Those recent pressures won't impact the convergence of prices back below the central banks official target ceiling of 4%, Mr. Carstens told an audience at the annual Mexican bankers' convention in Acapulco.
The country's annual inflation rate measured by the consumer price index rose to 4.72% as of April 15, up from 4.25% at the end of March and 3.40% in the same period a year earlier.
Even so, such rates are a far cry from the inflation Mexico experienced in previous decades, with prices rising in the 1980s by 100%, Mr. Carstens recalled.
These days, the Mexican economy and macroeconomic policy are seen as beacons of stability, while Mexican investment instruments offer juicier returns than many of their developed market peers.
The attractiveness of Mexican assets this year on the global stage has led the local currency to strengthen, stocks to soar and interest rates to touch historic lows.
The central bank's March decision to cut the overnight interest rate by 50 basis points to 4% responded in part to increased worries over the influx of capital into Mexico due to loose monetary policies elsewhere.
The peso closed in Mexico City Thursday at MXN12.1710 to the U.S. dollar, having gained nearly 6% against the greenback this year.
Mr. Carstens called the current strength of the peso "congruent" with the state of the Mexican economy, although he cautioned that the volatility and velocity of foreign investment could provoke an overreaction in the exchange rate that Mexican authorities ought to monitor closely.
Heavy foreign investment could lead to an "excessive increase" in local asset prices, the central banker warned, adding that the eventual exit of that money could shake Mexico's financial and economic stability.
The low interest rate environment in the U.S., Mexico's main trade partner, can't be considered permanent, Mr. Carstens said.
"Eventually it will have to normalize," and that could have significant consequences in the world context.
The U.S. seems to be achieving its goals of injecting stability into financial markets and the economy via monetary policy, which is favorable for Mexico, Mr. Carstens said.
Mexico's March rate cut also recognizes Mexico's structural achievements in recent years, the central banker said, adding that Mexico's stable economic conditions and financial systems should be a means to achieve other goals, such as better economic growth and job creation.
The Mexican government has prepared an ambitious reform agenda that aims to reshape the country's education system, communications, labor market, banks, tax code and energy policy.
Speaking just before Mr. Carstens, Deputy Finance Minister Fernando Aportela said the reforms--some of which have already been approved by Congress--should allow the Mexican economy to grow by more than 5% a year, versus this year's forecast for a 3.5% annual expansion.
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Those recent pressures won't impact the convergence of prices back below the central banks official target ceiling of 4%, Mr. Carstens told an audience at the annual Mexican bankers' convention in Acapulco.
The country's annual inflation rate measured by the consumer price index rose to 4.72% as of April 15, up from 4.25% at the end of March and 3.40% in the same period a year earlier.
Even so, such rates are a far cry from the inflation Mexico experienced in previous decades, with prices rising in the 1980s by 100%, Mr. Carstens recalled.
These days, the Mexican economy and macroeconomic policy are seen as beacons of stability, while Mexican investment instruments offer juicier returns than many of their developed market peers.
The attractiveness of Mexican assets this year on the global stage has led the local currency to strengthen, stocks to soar and interest rates to touch historic lows.
The central bank's March decision to cut the overnight interest rate by 50 basis points to 4% responded in part to increased worries over the influx of capital into Mexico due to loose monetary policies elsewhere.
The peso closed in Mexico City Thursday at MXN12.1710 to the U.S. dollar, having gained nearly 6% against the greenback this year.
Mr. Carstens called the current strength of the peso "congruent" with the state of the Mexican economy, although he cautioned that the volatility and velocity of foreign investment could provoke an overreaction in the exchange rate that Mexican authorities ought to monitor closely.
Heavy foreign investment could lead to an "excessive increase" in local asset prices, the central banker warned, adding that the eventual exit of that money could shake Mexico's financial and economic stability.
The low interest rate environment in the U.S., Mexico's main trade partner, can't be considered permanent, Mr. Carstens said.
"Eventually it will have to normalize," and that could have significant consequences in the world context.
The U.S. seems to be achieving its goals of injecting stability into financial markets and the economy via monetary policy, which is favorable for Mexico, Mr. Carstens said.
Mexico's March rate cut also recognizes Mexico's structural achievements in recent years, the central banker said, adding that Mexico's stable economic conditions and financial systems should be a means to achieve other goals, such as better economic growth and job creation.
The Mexican government has prepared an ambitious reform agenda that aims to reshape the country's education system, communications, labor market, banks, tax code and energy policy.
Speaking just before Mr. Carstens, Deputy Finance Minister Fernando Aportela said the reforms--some of which have already been approved by Congress--should allow the Mexican economy to grow by more than 5% a year, versus this year's forecast for a 3.5% annual expansion.
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