Banco de México’s Inflation Outlook Divides Opinions: Sub-Governor Jonathan Heath’s Perspective

Web Editor

August 21, 2025

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Background on Banco de México and Jonathan Heath

Banco de México, the central bank of Mexico, is responsible for managing monetary policy to maintain price stability and support economic growth. Jonathan Heath, the sub-governor of Banco de México, plays a crucial role in shaping these policies.

Jonathan Heath is a seasoned economist with extensive experience in monetary policy and financial markets. His expertise and insights are highly regarded within the central banking community, making his opinions particularly influential when it comes to discussions about inflation and interest rates.

Inflation Subyacente: A Closer Look

Inflation subyacente, or core inflation, refers to the underlying inflation trend excluding more volatile items such as seasonal products or administratively determined prices. It provides a clearer picture of the sustained inflationary pressures within an economy.

Heath’s Dissenting Opinion

During the monetary policy decision on August 7, Jonathan Heath cast a dissenting vote, arguing that the recent decline in the inflation gap was primarily due to easily reversible adjustments in the non-subyacente component.

He emphasized that the upward revision in the inflation subyacente forecast “suggests that its persistence has been underestimated.” This statement highlights his concern about the potential for inflation to remain elevated despite recent policy adjustments.

Monetary Policy Adjustments

Banco de México has implemented a series of interest rate cuts since March 2024, totaling ten adjustments in a cycle that included nine consecutive reductions up to August. The August decision marked the beginning of a new phase, with smaller 25-point adjustments following four consecutive 50-point reductions.

Heath’s dissenting vote in August was the second consecutive instance where he advocated for maintaining the status quo, signaling his cautious approach to further rate cuts.

Impact on the Economy

The ongoing debate surrounding inflation subyacente and monetary policy adjustments has significant implications for the Mexican economy. Striking the right balance between controlling inflation and supporting growth is crucial for maintaining stability and fostering sustainable economic development.

Heath’s perspective, as a sub-governor of Banco de México, sheds light on the complexities involved in making these critical decisions. His concerns about underestimating inflation persistence underscore the need for vigilance and careful consideration of various economic factors.

Key Questions and Answers

  • What is inflation subyacente? Inflation subyacente, or core inflation, refers to the underlying inflation trend excluding more volatile items such as seasonal products or administratively determined prices. It provides a clearer picture of the sustained inflationary pressures within an economy.
  • Who is Jonathan Heath and why is he relevant? Jonathan Heath is a sub-governor of Banco de México, the central bank of Mexico. His extensive experience in monetary policy and financial markets, along with his influential insights, make him a key figure in shaping Mexico’s monetary policy decisions.
  • What was Heath’s dissenting opinion during the August 7 monetary policy decision? Jonathan Heath argued that the recent decline in the inflation gap was primarily due to easily reversible adjustments in the non-subyacente component. He also emphasized that the upward revision in the inflation subyacente forecast “suggests that its persistence has been underestimated.”
  • How has Banco de México adjusted interest rates since March 2024? Banco de México has implemented a series of interest rate cuts since March 2024, totaling ten adjustments in a cycle that included nine consecutive reductions up to August. The August decision marked the beginning of a new phase, with smaller 25-point adjustments following four consecutive 50-point reductions.