MEXICO CITY (Reuters – Mexico’s inflationary pressures have been temporary but the International Monetary Fund (IMF), said on Friday that it is difficult to balance its economic slack with recent highs.

The IMF stated in a statement that a credible, medium-term tax reform would be implemented with the economic recovery. It would finance the necessary social and investment spending, and place the ratio of public debt to GDP on a downward trend.

According to Reuters, Mexico’s core inflation is at its highest since 2009. The annual Mexican inflation rate reached the highest levels in nearly four years in October.

Directors of IMF recommend a data-driven, gradual pace of policy normalization in context of the 2021 Article IV consult with Mexico. This will ensure that support for recovery is balanced against medium-term inflation expectations.

Mexico’s economy shrank 0.2% https://www.reuters.com/world/americas/mexican-economy-shrinks-first-time-since-pandemic-rebound-2021-10-29 in the July-September period versus the previous quarter after a resurgence in the coronavirus pandemic dragged down service sector activity and disrupted global supply chains.

The contraction, Mexico’s first since a recovery began from the pandemic, poses a challenge https://www.reuters.com/article/mexico-economy-rates-idUSL1N2RP1ZN to the central bank’s monetary policy tightening cycle, but stubbornly high inflation appears likely to take precedence.

The Bank of Mexico currently has 6.1% annual headline inflation, which is double that of the 3% target rate.