It is worth mentioning that Banxico increased its projection inflation for this year. Perhaps the weakening of the peso can print you a further increase to the rate of inflation that would limit the ability of the Central Bank continue with cuts in its interest rate to stimulate the economy. Past of the ability or not that Banxico may have to continue with the cuts in the benchmark interest rate, the problems in the real economy are affecting the credit market weakening one of the main channels of monetary policy transmission. Other channels of transmission of the same such as the exchange rate channel, has also lost strength in recent times product of the worsening of the international crisis. The economic downturn is affecting the quality of the loan portfolio of the banks which although this situation does not represent increased risk for the solvency thereof, Yes makes them little predisposed to generate funding, thereby producing a vicious circle that deepens the crisis situation. In December 2008, the nonperforming loans of consumer credits increased by 50% compared to the same month of 2007 (placing 8.75%). Late payments on credit cards segment totalled 10,51% to principles of the year, the Government of Felipe Calderon, launched an economic stimulus plan.
So little time having announced it appears as insufficient to attenuate the impact of the crisis. In Mexico, there is uncertainty about how to prevent the economy from falling into recession. On the day yesterday, ended the first panel of the Forum Mexico crisis: what to grow? which brings together former leaders of Spain, Chile, Italy and Uruguay. In it the former Chairman of the Council of Ministers of Italy, Romano Prodi, recommended that Mexico for any decision you are going to take to do so quickly. This recommendation was endorsed by the rest of the participants. Said Forum resulted in a broad agreement that Mexico should focus on attacking the problem of unemployment and security social.
One of those attending was Agustin Carstens who acknowledged that the economy of Mexico needs structural reforms that are complementary with counter-cyclical policies to resume growth. According to the Minister, the agenda of structural changes could involve measures to reactivate the internal market, infrastructure and housing. Carstens with their statements door left open to the evaluation of new measures to stimulate the economy. Close started 2009 is becoming clearer the picture for Mexico. With an economy which will inevitably enter into recession if deep programs are not implemented, and before the little effectiveness which will take monetary policy with its weakened transmission towards the real economy channels, the only output that is is the application of a stimulus package more forceful that hold employment and stimulate domestic consumption. Currently, the Mexican economy depends on its own forces. Original author and source of the article.