Are Inflation Expectations Well Anchored in Mexico?

Beauregard, Remy; Christensen, Jens H. E.; Fischer, Eric; Zhu, Simon

Journal Article

Are Inflation Expectations Well Anchored in Mexico?

Abstract: Price inflation has increased sharply since early 2021 in many countries, including Mexico. If sustained, high inflation in Mexico could raise questions about the ability of its central bank to bring inflation down to its 3% inflation target. However, analyzing the difference between market prices of nominal and inflation-indexed government bonds suggests investors’ long-term inflation expectations in Mexico are close to the central bank’s inflation target and are projected to remain so in coming years.

Keywords: inflation expectations; Mexico; covid19;