M E X I C O : G R O W T H , I N F L A T I O N , U S D / M X N , A - - PowerPoint PPT Presentation

June 16, 2011

M E X I C O : G R O W T H , I N F L A T I O N , U S D / M X N , A N D S E C U R I T Y I S S U E S

Gabriel Casillas, Ph.D.AC Mexico Economic Research (52-55) 5540-9558 gabriel.casillas@jpmorgan.com J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero

S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L

Agenda

L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1

1

Strong growth, despite a soft patch in global manufacturing in 2Q11



Japanese disaster will moderate activity, but such a disruption is likely to be temporary 1 Benign inflation will prevail in 2011 8 The peso strengthening cycle might be over 11 Escalation of drug-related violence is about to reach an inflection point 13

M E X I C O : G R O W T H , I N F L A T I O N , U S D / M X N , A N D S E C U R I T Y I S S U E S

L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1

%oya 2010 1Q11 2Q11 3Q11 4Q11 2011 GDP AS 5.5 4.6 3.2 5.3 5.1 4.5 Agriculture 5.7 1.2 1.3 1.3 1.4 1.3 Industrial 6.1 5.2 1.3 4.5 4.8 4.0 Manufacturing 9.9 7.4 1.6 6.9 6.3 5.5 Other 1.2 2.3 0.9 1.3 2.7 1.8 Services 5.0 4.4 4.1 4.6 4.7 4.5 Imports 22.1 7.5 4.7 6.1 8.5 6.7 GDP AD 5.5 5.1 4.0 4.6 4.3 4.5 Consumption 4.7 4.6 4.5 4.2 4.0 4.3 GFI 2.3 3.5 5.2 5.4 5.2 4.8 Exports 24.3 8.7 6.9 9.1 8.6 8.3

Strong growth, despite a soft patch in global manufacturing in 2Q11

Source: J.P. Morgan.

Mexico’s economic activity forecasts  We believe there are five reasons to still be positive on

Mexico’s growth in 2011:

• 1. A reinvigorated auto sector
• 2. Ascending domestic demand
• 3. A positive outlook for banking credit; and
• 4. Major infrastructure projects to begin construction

 As a result, we are forecasting Mexico’s GDP to grow

4.5% in 2011, and 3.8% in 2012

 We identify four key risks to our optimistic growth call:

• 1. A longer-than-expected transitory soft patch in manufacturing

caused by the Japanese earthquake/tsunami and its aftermath

• 2. The possibility of less vigorous growth in the US
• 3. High and persistent global energy prices
• 4. Potential escalation of drug-related violence

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Wages in the manufacturing sector

Source: Ministry of Finance

• 1. A reinvigorated automotive industry has been the main driver of manufacturing

activity



Auto production disruptions due to Japanese disaster suggest manufacturing is likely to moderate during

• 2Q11. However, such downturn is likely to be

temporary and the drag it is causing is likely to fade away as we move toward the second half of the year to go back to 1Q11’s levels



Several automakers across the world have reallocated part of their production to Mexico to benefit from a depreciated real exchange rate, a narrow wage differential between Mexico and other Asian countries, particularly China, still-high transport costs, and the country’s strategic geographic location

Source: J.P. Morgan with data from Banxico

Mexican peso multilateral real exchange rate

Source: US Census Bureau (up to October 2010), and Bloomberg

Participation of Mexican manufacturing exports in US imports vs. oil prices

75 85 95 105 115 125 135 145 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Index, Jan 2003=100 4.3% Long-term

0.5 0.7 0.9 1.1 1.3 1.5 1.7 1.9 2.1 2.3 2.5 2002 2003 2004 2005 2006 2007 2008 2009 2010 Mexico China

US$ 237% 17.4%

11.1 11.6 12.3 13.012.9 12.2 11.7 11.3 11.912.1 12.9 14.0 10.4 11.9 10 11 12 13 14 15 1997 1999 2001 2003 2005 2007 2009 10 30 50 70 90 110 Mexico's share in US manufacturing imports (%) WTI, US$ per barrel (RHS)

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L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1 4.6 4.6 5.3 7.7 3 2.9 3.5 3.7 2.3 2.8 1.7

• 0.8
• 7.2
• 9.6
• 5.5
• 2

4.5

• 15
• 10
• 5

5 10 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 13.5 13.7 13.9 14.1 14.3 14.5 14.7 14.9 Net exports GFI Public spending Private consumption Formal employment (RHS) %oya

GDP – Contribution by aggregate demand component1

Source: J.P. Morgan with data from INEGI

• 1. GFI includes the incidence of the change in inventories
• 2. Stronger domestic demand

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While Mexico’s economic rebound was initially externally-driven, now domestic demand is supporting the recovery



The external demand rebound has improved employment conditions, and domestic demand is now back

• n track



Three-phase crisis in 2009 unraveled a three-phase recovery in 2010



We first observed an important rebound of external demand, particularly boosting Mexico's manufacturing activity (phase I)



This led to a significant improvement in job market conditions (phase II)



Now, with a two-to-three quarter lag, domestic demand is starting to pick up (phase III)

• 3.4

3.1 5.9 3.6 3.7 1.7 5.9 7.0 5.7 3.5 4Q09 1Q10 2Q10 3Q10 4Q10 Internal External

• 1.7

7.9 %oya 12.9 7.2 9.2

Contributions of internal and external demand to aggregate demand

Source: J.P.Morgan with data from INEGI

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• 30
• 20
• 10

10 20 30 40 Jan-07 Sep-07 May-08 Jan-09 Sep-09 May-10 Jan-11 Total Consumer credit Housing credit Credit to firms

%oya Source: J.P.Morgan with data from Banxico

Credit card cycle Banking credit to the private sector 

Mexico’s credit system could be a key driver for domestic consumption



Total commercial bank credit to the private sector represents less than 15% of GDP



Mexico observed a credit card boom back in years 2003-06, in which non-performing loans increased significantly, making banks to rethink their credit-giving policies, and this was exacerbated during the global financial crisis



Nevertheless, commercial banks have now "cleaned up" their credit balances, credit card interest rates have moderated, and employment conditions have improved significantly



As a result, we believe that it is highly likely that all these will probably lead to an ascending trend in the country's domestic credit cycle

Source: J.P.Morgan with data from Banxico

• 60
• 40
• 20

20 40 60 80 Jan-00 Oct-03 Jul-07 Apr-11 2 4 6 8 10 12 14 16 18 20 Credit card Delinquency rate (RHS)

%oya in real terms % of total credit

Credit cards’ cost and formal employment

Source: J.P.Morgan with data from Banxico

20 25 30 35 40 45 Jan-04 Jun-06 Nov-08 Apr-11

• 6
• 4
• 2

2 4 6 Credit card interest rate Formal employment (RHS)

%oya in real terms % of total credit

• 3. A positive outlook for banking credit

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Government-sponsored infrastructure projects1

Source: J.P. Morgan with data from Banobras (State-owned development bank)

• 1. Includes ongoing works and the ones projected to start in year 2011.
• 4. Infrastructure projects to start its construction phase

Investment, US$ mn Project description Total Government Private Total 25,786 15,206 10,580 Crude oil and gas 13,778 13,778

• -

Gas pipelines 660 660

• -

Refining 10,740 10,740

• -

Crude oil production 2,378 2,378

• -

Tourism 9,653 764 8,889 Transportation and telecom 1,550 139 1,411 Roads and highways 1,270 139 1,131 Seaports and airports 280

• -

280 Electricity generation 777 514 263 Water 28 11 17



Several projects that had been in a feasibility study phase over the past two years are now ready start construction



Furthermore, several projects suffered important delays because of the global financial crisis.



However, the state-owned development bank Banobras modified its lending framework in 2010 to provide guarantees in addition to funding, and is now working with the National Infrastructure Fund to also provide direct, non-refundable funds to projects with a high social return.



According to data from Banobras, there are about US$ 26 billion -out of a total of US$ 51.2 billion of specific projects-, that are estimated to be invested between year-end 2010 and 2012 (with specific starting dates).



As it is shown in table, these US$ 26 billion are distributed between crude oil and gas (53.4%), tourism (37.4%), transportation and telecom (6%), electricity generation (3%), and water projects (0.1%). These investments have a major government spending component (US$ 15.2 or about 60%). However, given the way these projects are planned, these could foster another US$ 10.6 billion of private sector investments as well.

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Agenda

L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1

8

Benign inflation will prevail in 2011



We believe the MoF will not step up the gasoline price monthly adjustment, despite the large gap between domestic and global prices 8 Strong growth, despite a soft patch in global manufacturing in 2Q11 1 The peso strengthening cycle might be over 11 Escalation of drug-related violence is about to reach an inflection point 13

M E X I C O : G R O W T H , I N F L A T I O N , U S D / M X N , A N D S E C U R I T Y I S S U E S

L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1 11.3 5 6 7 8 9 10 11 12 13 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11

Mexico US MXN per liter Projected using the current MXN 0.08 monthly increase

9.72 Jan '09 Jan '10 Jan '11 Subsidy: US$ 20.5 bn Subsidy: US$ 1.2 bn Subsidy: US$ 6.1 bn 23% Subsidy (Jan-Apr): US$ 2.9 bn 38%

Low-grade gasoline prices

Source: J.P. Morgan with data from Pemex and Bloomberg

• 1. Mexico: Low-Grade Gasoline (Magna Sin in Mexico City Metro Area); US: PADD 3 all-grade average price net of taxes

The MoF has committed to maintain the monthly adjustment. The gap between international gasoline prices and local prices has narrowed to 24%, from levels around 32% in early May, levels still below the gap observed back in 2008

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L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1



In the absence of higher gasoline prices, inflation will remain well-contained due to three issues:

1.

Structural effects have increased the degree of competition among the retail and airline sectors

2.

Moderate wage negotiations. Wages have increased mainly because of the job market recovery, not from an increase in real wages

3.

Base effects from the new CPI calculation methodology, which will introduce a downward bias to this year’s inflation outlook



Banxico’s tone has turned more dovish, we have observed an increased degree of uncertainty with respect to the approval of the US debt ceiling, as well as on the European sovereign crisis and the final effects of the Japanese’s unfortunate disaster



In this context, we believe that Banxico’s next hiking cycle will start in 2H12 because there will be no need to tighten monetary policy in the absence of any sort of inflationary pressures and a slowly growing internal demand



We project the reference rate to end this year at 4.5%, and at 5.25% by year-end 2012, to reach the end of the cycle at 6.5%.



This is an out-of-consensus view. In fact, while the median estimate of the latest Banamex survey is that Banxico will lift the reference rate by 25bps in January 2012, the range goes from October 2011 to March 2012.



.

The US Fed’s long pause, benign inflation, manufacturing slowdown, and well- anchored inflation expectations will keep Banxico on hold until 2H12

• 6
• 4
• 2

2 4 6 8 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Wage mass Wages Formal employment

%oya, real terms

Real wage mass in the formal sector

Source: J.P.Morgan with data from Banco de México

• 12
• 10
• 8
• 6
• 4
• 2

2 4 6 8 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 Industrial IGAE Services

%oya

Output gap

Source: J.P. Morgan with data from INEGI

• 1. Potential GDP estimated using Hodrick-Prescott filter on seasonally-adjusted IGAE

and subcomponents. We used our estimation for 1Q11 figure.

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Agenda

L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1

11

The peso strengthening cycle might be over



The real exchange rate level is around its long-term average 11 Strong growth, despite a soft patch in global manufacturing in 2Q11 1 Benign inflation will prevail in 2011 8 Escalation of drug-related violence is about to reach an inflection point 13

M E X I C O : G R O W T H , I N F L A T I O N , U S D / M X N , A N D S E C U R I T Y I S S U E S

L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1

Major emerging currencies index

40 50 60 70 80 90 100 110 120 130 140 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Mexican peso South Korean won Peruvian sol Brazilian real Colombian peso Southafrican rand Index Jan (2000 = 100)

Source: Bloomberg and J.P.Morgan Source: J.P. Morgan with data from Bloomberg

• 1. Calculated using CME non-commercial positions

US dollar net short positioning vis-à-vis the Mexican peso1

• 3
• 2
• 1

1 2 3 4 5 6 7 Jan-00 Nov-02 Sep-05 Jul-08 May-11

US$, billion

 Mexico remains in a ‘sweet spot’. In terms of growth,

public finances (budget deficit of 2.8% of GDP and government debt at 32.5% of GDP), annual inflation around 3%, foreign reserves at their historical high (above US$125 billion), and no capital controls put in place, Mexico remains in a ‘sweet spot’

 The peso has strengthen as episodes of high risk-

aversion have faded away. The peso has appreciated almost 6% year-to-date, in which its most important appreciation period took place in April, particularly after the geopolitical tensions in the MENA region, as well as other events that increased the risk-aversion levels of market participants, started to fade away to some extent

 However, USD/MXN downward trend might be over. In

line with our quarterly forecasts (2Q11: 11.60; 3Q11: 11.60; 4Q11: 11.80), it is our take that the USD/MXN downward trend might have come to an end

 Fundamentals. From a structural standpoint, the real

exchange rate level is around its long-term average

 Technicals. From a technical point of view, short

USD/MXN positioning in the CME is close to its historical highs, and there is anecdotal evidence of a plethora of stop-loss/take-profit orders and options’ barriers around 11.50 pesos per US dollar

 As a result, in the absence of a major structural change

such a significant revaluation of the renminbi—that could put more pressure on the peso to strengthen—the peso should be quite close to the end of the current strengthening period

We expect USD/MXN to trade below 12 for most of this year, reaching levels around 11.8 by year-end 2011, and 11.5 by end-2012

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T H E P E S O S T R E N G T H E N I N G C Y C L E M I G H T B E O V E R

Agenda

L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1

13

Escalation of drug-related violence is about to reach an inflection point



It is our take that government actions against organized crime have started to pay back 13 Strong growth, despite a soft patch in global manufacturing in 2Q11 1 Benign inflation will prevail in 2011 8 The peso strengthening cycle might be over 11

M E X I C O : G R O W T H , I N F L A T I O N , U S D / M X N , A N D S E C U R I T Y I S S U E S

L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11

Number of murders

Drug-related monthly deaths

Source: EMPRA (Emerging Markets Political Risk Analysis) with data from the President’s Economic Advisors and local newspaper Milenio

Mexico has experienced a considerable escalation of drug-related violence since 2007

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L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1

Hotspots of drug-related violence

Source: EMPRA (Emerging Markets Political Risk Analysis)

Chihuahua Sinaloa Tamaulipas Guerrero Baja California Michoacán Morelos Nueva León

El Salvador 71 Chihuahua 74.4 Honduras 67 Sinaloa 47.2 Guatemala 52 Guerrero 45.6 Venezuela 49 Baja California 23.7 Colombia 35 Morelos 18.9 Brazil 22 Michoacán 18.4 Russia 15 Tamaulipas 9.0 Mexico 15 Distrito Federal 8.4 Nuevo León 6.0

Number of murders per 100,000 inhabitants1

Source: United Nations and Ministry of Public Security. 1. Data as of 2009

Selected states in Mexico Selected countries

Drug-related violence is well-geographically localized and we have seen no major spillovers

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• 10.0
• 5.0

0.0 5.0 10.0 15.0 00Q1 01Q2 02Q3 03Q4 05Q1 06Q2 07Q3 08Q4 10Q1 FDI Portfolio flows

US$ billion Source: Banco de México Source: Banco de México

Tourism revenues FDI and portfolio flows

Non-border tourism revenues have returned to pre-crisis levels, while FDI and portfolio flows have remained relatively strong

400 500 600 700 800 900 1,000 1,100 1,200 2000 2002 2004 2006 2008 2010 150 170 190 210 230 250 270 290 Non-border (LHS) Border (RHS)

US$, million, 6mma

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L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1 200 400 600 800 1,000 1,200 1,400 1,600 1,800

Number of murders

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 2007 2008 2009 2010 2011 2012 2013 2014 2015

Drug-related violence cycle

Source: J.P.Morgan with data from EMPRA

Drug-related violence cycle

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Additional Material

• Appendix I. Mexico’s balance of risks 2011
• Appendix II. The Government has been able to stabilize production around 2.5 million barrels per day
• Appendix III. Towards the Presidential elections in 2012
• Appendix IV. Limited impact from the Euro area sovereign crisis
• Appendix V. Banxico’s US Dollar put options mechanism
• Appendix VI. A more transparent central bank

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Appendix I. Mexico’s balance of risks 2011

Strengths Weaknesses

• Skilled labor force (manufacturing)
• Banking credit expansion
• Infrastructure projects
• Solid fiscal stance
• A more transparent central bank
• Escalation of drug-related violence
• Lack of meaningful structural reforms
• Uncompetitive market structure
• Inflexible labor market

Opportunities Threats

• Extension of “Bush era” tax cuts
• Depreciated peso
• High energy costs
• Fiscal deficits abroad
• Inclusion of Mbonos in the WGBI2
• Revaluation of Asian currencies
• High and persistent energy prices
• Euro area sovereign crisis
• Less vigorous growth in the US
• Higher grain prices in international markets
• Fiscal and monetary “exit strategies” abroad
• Better investment opportunities in other emerging economies

Mexico SWOT analysis1

Source: J.P.Morgan.

• 1. SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture is credited to

Humphrey, Albert (1970).

• 2. Mexican local-denominated bonds were included in Citigroup’s World Government Bond Index (WGBI) back in October 2010.

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L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Cantarell Ku-Maloob-Zaap Other

Million barrels per day

Crude oil production

Source: Ministry of Energy

Appendix II. The Government has been able to stabilize production around 2.5 million barrels per day

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L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1 47.7 13.1 19.3 10 20 30 40 50 60 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 PRI PAN PRD

%

Presidential elections – voters’ intention poll

Source: Source: Consulta Mitofsky (May 2011). 1. The dotted line includes the names of the leading candidates (PRI – Enrique Peña-Nieto; PAN – Santiago Creel; PRD – AMLO)

Appendix III. Towards the Presidential elections in 2012

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Elections in 2011

Source: IFE (Federal Electoral institute)

This year’s gubernatorial elections will be important to gauge 2012 presidential election, particularly the election in the State of Mexico

Governor Local Congress Date Guerrero PRD

• -

30-Jan Baja California Sur PAN X 6-Feb Coahuila X X 3-Jul Estado de México X

• -

3-Jul Nayarit X X 3-Jul Michoacán X X 13-Nov 22

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L A T I N T R A D E C F O C O N F E R E N C E 2 0 1 1

Source: J.P.Morgan with data from Banxico, the Ministry of Economics, and Mexico’s Securities and Exchange Commission (CNBV).

Appendix IV. Limited impact from the Euro area sovereign crisis

 (1) International trade: Mexico exports only about 5% to the

Euro zone. This contrasts to the previous recession where US downturn permeated directly into a Mexican economy that exports 80% to its northern neighbor

 (2) FDI: Netherlands and Spain has been responsible for about

25% of total FDI inflows in the past few years. While the former is not facing the financial and fiscal stress of the latter. We highlight that about one fourth of the FDI from Spain is mainly directed towards construction projects that have need to win government auctions to continue building these projects, so we find hard to believe that these firms will leave these projects ‘unattended’

 (3) Mexican financial system: Spanish banks are responsible

for more than 40% of total consumer credit in Mexico. In this context we are concerned that these banks could downsize their credit operations in Mexico. Nonetheless, the impact could be limited, in our view, as the ratio of total banking credit to GDP is only 13%, and credit has remained subdued for more than three years

Euro area crisis channels of transmission

% of total % Mexican exports by country North America 84.0 Europe 5.2 South America 4.8 Asia 3.3 Other 2.7 FDI by country United States 47.0 Euro area 30.0 Spain 13.0 Netherlands 11.0 Other Euro countries 6.0 United Kingdom 4.0 Other 18.0 Bank’s consumer credit by country Spain 44.9 United States 33.9 United Kingdom 9.1 Canada 2.2 Mexican and others 9.8 23

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 Back in March 2010 Banco de México implemented a

USD/Put MXN/Call options mechanism to accumulate foreign reserves trying to induce no disturbances in the FX market

 The monthly amount is worth US$ 600 million every last

working day of each month

 This mechanism will be exactly the same as the one used

back in the 1996-2001 period to accumulate reserves

 The owners of the options will have the right to sell US

dollars to the Central Bank (in exchange for pesos) at the previous day’s ‘fix’ rate, whenever the ‘fix’ rate is below or at the 20-day moving average ‘fix’ rate

 So far the Central Bank has been able to accumulate

around than US$ 7.3 billion from this source

 In fact, Banxico currently holds slightly less than US$ 130

billion (all-time high)

USD/MXN ‘Fix’ Rate and 20-day moving average

Source: Banco de México

Banco de México foreign reserves

Source: Banco de México

Appendix V. Banxico’s US Dollar put options mechanism

128.5 70 80 90 100 110 120 130 Jan-09 Apr-09 Jul-09 Nov-09 Feb-10 Jun-10 Sep-10 Jan-11 Feb-11

US$, billion

11.5 12.5 13.5 14.5 15.5 Jan-09 Aug-09 Feb-10 Sep-10 Mar-11 20-day moving average Spot 'fix rate'

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Banxico’s calendar for 2011

Source: Banxico

Appendix VI. A more transparent central bank

Monetary Policy Meeting Meeting Minutes Quarterly Inflation Report January 21 February 4 9 March 4 18 April 15 29 May 27 11 June 10 July 8 22 August 26 10 September 9 October 14 28 November 9 December 2 16



Last year Banco de México announced several modifications to their communication scheme



Publication of meeting minutes. These include the board’s rationale behind the monetary policy decision taken, as well as the main drivers of the discussion



Less number of meetings. Banxico reduced the number of monetary policy meetings this year to 8, from 11 in the past two years



More detailed information. However, it is worth noting that Banxico stated that it will now publish more detailed information and will continue providing monthly assessments on monetary policy in its inflation releases and quarterly reports



In this context, Banxico’s monetary policy conduction appears to be shifting to a more explicative and market-friendlier fashion



This, in our view, is emphasizing on the relevance of managing expectations as a key monetary policy tool, and represents an important step towards a more modern, transparent, and market friendly central bank



On the other hand, starting in July the National Statistics Institute (INEGI), will be in charge of measuring and publishing inflation, instead of Banxico. In our view, this is another important step to improve transparency

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