Question for Banxico: What matters more, inflation or growth?

The economy is not growing, and inflation is rising. GDP in the first quarter grew 0.2% compared to the last quarter of 2025, while inflation in the first half of May was 4.22% annualized.

How worried should we be? The data isn't panic-inducing, but it is depressing. The 0.2% growth is enough to prevent experts from declaring a technical recession, but it makes it clear that the economy is performing poorly, especially when we focus on formal job creation, industrial activity, and the performance of the southern states, where the impact of the substantial investments of the previous six-year term—the Maya Train and the Dos Bocas refinery—has already evaporated.

Inflation of 4.22% would be the envy of Argentina or Turkey (which aim for nearly 30% annually), but it's a bad figure for Mexico. It's bad for public policy objectives, and worse for the millions of people who suffer from inflation in their daily lives: it affects food, services, and medicines, for example.

The figures for the first half of May are outside the Bank of Mexico's target range. Inflation should be 3%, plus or minus 1%. With 4.22%, inflation breaks a "good run" that began only in the second half of December 2024. At that point, inflation fell below 4% for the first time since March 2022, when the post-pandemic inflationary spiral began.

Can we say that inflation is back? Yes. There is inflationary pressure domestically, in the labor market, in services, and in some imported goods. There is also inflationary pressure from factors related to climate and water stress. It is a given that droughts will bring poor harvests and higher prices for agricultural products.

The international context isn't helping. Protectionist drumbeats are beating everywhere. At the forefront is the trade war between the United States and China, but we also have the reconfiguration of value chains. Restrictions on the entry of products from China will have many advantages, but will lead to price increases in some production chains. We may once again hear of supply problems or product shortages. Uncertainty and speculation are on the horizon.

Faced with internal pressures and new international scenarios, we have a Bank of Mexico that is distracting itself from its sole mandate, which is to combat inflation.

Banxico's statements indicate that the central bank is more concerned about the evolution of GDP and the loss of economic dynamism than about what happens to the National Consumer Price Index. So far in 2025, there have been three monetary policy decisions. In each of them, the benchmark interest rate has been lowered by half a percentage point. In the middle of last year, it was at a very high 11.50. Now it's at 8.50. A further half-point cut appears to be on the way. With this, the interest rate would drop to 8.00%. We continue with real rates that are well above inflation. The question is: Are 8 or 8.5% high enough to cool inflationary pressures?

The documents accompanying Banxico's decisions acknowledge inflationary risks and economic performance issues. Ultimately, the Dove outweighed the Hawk. The desire to stimulate the economy is stronger than the desire to send a strong message that the Bank of Mexico will focus on fulfilling its sole mandate.

What's the problem? It's true that the economy is performing poorly. We grew less than 1% in the last six-year term, and Sheinbaum's first half of the year's GDP is in the red, but it's not the Bank of Mexico's responsibility to solve this problem. For growth, the Mexican government has other institutions and tools: the Ministry of Economy, development banks, and other agencies that address specific agendas or sectors: Agriculture, Tourism, Infrastructure... even the Ministry of Finance.

Should the Bank of Mexico do the work that others should do? That is the question.