Bank of Mexico Targets Inflation

The Bank of Mexico implemented a strict anti-inflation policy that would bring it in line with the United States, Canada and European countries by 2003. But the bank stopped short of imposing yearly goals, wary of tying down the new government that will be elected in July and will take office at the end of the year. The plan also introduces quarterly inflation reports to assess its success at keeping inflation low with a restrictive monetary policy. In its monetary policy guidelines for 2000, the central bank assumes that economic growth will be 4.5%, taking into account an expected gradual deceleration of the U.S. economy, relatively strong oil and commodities prices and an increase in direct foreign investment. Among risk factors for the year are inflationary pressure in the United States that could lead to sharp increases in interest rates, volatility in oil markets and domestic political issues, the bank said. As reported previously, the Bank of Mexico said it will maintain its restrictive monetary policy with the goal of keeping inflation below 10% in 2000. In 1999, the consumer price index rose 12.32%, below the government’s 13% target.