Jonathan Heath, deputy governor of the Bank of Mexico, questioned the institution’s official outlook and warned that current estimates may be overly optimistic.
Heath argued it is unlikely that inflation in Mexico will fall to the central bank’s 3% target by the second quarter of 2027.
After 12 consecutive interest rate cuts, the Bank of Mexico held its benchmark rate at 7.0% last Thursday.
At the same time, the bank extended its earlier forecast, which had projected inflation would reach the 3% target by the third quarter of this year, to the second quarter of 2027.
Heath said the latest projection may still understate how persistent inflation is.
In a podcast interview with financial firm Banorte released on Wednesday, he cautioned that the central bank may be relying on overly optimistic assumptions and failing to fully account for underlying inflation pressures.
He warned that this approach could lead to premature rate cuts and undermine the institution’s credibility.
Credibility concerns resurface
Heath voiced similar concerns in November, when he said the central bank was facing a “credibility crisis” over its inflation projections.
He reiterated his cautious stance on monetary policy in the latest interview.
“I have consistently voted since the beginning of this cycle that we should be more cautious and move more slowly in cutting rates,” Heath said.
His remarks highlight internal differences over the pace of monetary easing following the bank’s 12 consecutive rate cuts.
Core inflation climbs in January
The deputy governor’s fears were reinforced by data released on Monday, which indicated that both headline and core inflation increased in January.
In January, the widely tracked core inflation index—which excludes more erratic prices—rose to 4.52%.
That was the highest level since March 2024 and an increase from 4.33% in December.
As the central bank paused its easing cycle and maintained the benchmark rate at 7.0%.
Discussion of the policy path
Heath’s remarks indicate that the central bank is still debating how quickly to cut interest rates, despite the recent slowdown in inflation.
He warned that relying too heavily on favourable inflation forecasts could lead policymakers to ease monetary policy prematurely, potentially undermining confidence in the bank’s ability to meet its target.
His call for a more gradual approach suggests that some policymakers believe inflation could remain above target for longer than expected, particularly if structural pressures prove stronger than current projections suggest.
While the official forecast points to a return to the 3% target in 2027, Heath’s position reflects a more cautious outlook within the central bank as recent inflation data show renewed upward pressure.
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