"Reducing interest rates is premature as long as inflation remains uncontrolled," warned Everardo Elizondo.
By JOSÉ ÁNGEL DE LA PAZ | EGADE BUSINESS SCHOOL
As part of "Mexico's Economic and Political Outlook 2025," Everardo Elizondo, former deputy governor of Banco de México and distinguished professor of Economics at EGADE Business School of Tecnológico de Monterrey, analyzed the Mexican economy's structural and cyclical challenges. He noted that Banxico's recent interest rate cuts are premature and could lead to confusion.
In his keynote lecture, “The ‘Yesterday’ and ‘Tomorrow’ of the Mexican Economy: Conjectures and Perplexities”, delivered on January 27 in Mexico City, Elizondo highlighted that while general inflation has decreased significantly—from levels above 9% in 2022 to less than 4% currently—inflation control remains incomplete.
"The 3% target has not been consistently achieved, and until it is sustained, inflation control cannot be guaranteed," he stated.
He also criticized the misconception of a "tolerance range" for inflation set by Banco de México, calling it a "space of ignorance" necessary for managing external shocks.
Regarding economic growth, Elizondo emphasized that Mexico has faced a structural weakness for over 25 years, with an average growth rate of 2%, which has declined further in recent years.
For 2025, he anticipates that economic activity will continue to weaken, with growth that “at best will not reach zero.” He attributes this stagnation to the lack of investment in human capital, technology, and infrastructure and to regulatory uncertainty negatively impacting the investment climate.
"There is insufficient investment in human capital and technology, which keeps us stagnant," he noted.
The international context was also analyzed. Elizondo warned about the threat posed by protectionist policies in the United States, particularly the potential use of tariffs as a political tool on issues like migration and drug trafficking.
While he expressed concern about these measures, he also underscored that the growth of Mexican exports remains tied to the strength of the U.S. economy.
Finally, Elizondo reaffirmed his hawkish stance on monetary policy, stressing that Banco de México must focus exclusively on its mandate to control inflation.
"Banco de México is not designed to be a green bank or to promote employment; its sole objective is to preserve price stability, which has not yet been fully achieved," he concluded.
"Mexico's Economic and Political Outlook 2025" is an event organized by EGADE Business School to commemorate its 30th anniversary in collaboration with the School of Government and Public Transformation of Tecnológico de Monterrey.
In addition to Elizondo, the program also featured a lecture by Carlos Elizondo Mayer-Serra, professor and researcher at the School of Government and Public Transformation.
The event began with a welcome by Pablo Necoechea, Regional Director of EGADE Business School in Mexico City and Querétaro, and concluded with a panel discussion featuring Mariana Campos, general director of México Evalúa; Carlos Aurelio Hernández, president of the National Energy Commission at COPARMEX, and Roberto Durán, professor and researcher at the School of Government and Public Transformation.