Mexico had a long period of financial evolution with some exchange rate management plus increasingly active monetary policy, before embarking in 2001 on inflation targeting which became more organised and effective from 2011.
|Years||Targets and attainment||Classification|
|1974-6||fixed exchange rate (fixed since 1954) in context of heavily regulated monetary system but open foreign exchange market with no capital controls||full exchange rate targeting FERT|
|1977-2000||exchange rate floating, initially more managed (with dual exchange rate market 1982-91), but freer float from 1995; monetary policy instruments evolving from central bank-set interest rates, reserve requirements and occasional direct credit controls, with recurring fiscal dominance, to open market operations in short and medium term government securities; recurring periods of exchange rate weakness and capital flight, especially 1982 (which precipitated nationalisation, reform and privatisation of commercial banks) and 1994; central bank more independent from 1993||loosely structured discretion LSD|
|2001-3||converging inflation targets nearly missed twice in three years; targeting operated through (longstanding) control of banks’ settlement balances rather than policy rate; central bank communication weak, e.g. no inflation forecasts published; ‘rules-based’ mechanism from 2003 to provide for international reserve accumulation without distortions to forex market||loose converging inflation targeting LCIT|
|2004-10||stable inflation targets missed 2008, 2009 (with some upward drift of inflation expectations), and nearly missed 2004, 2010; inflation forecasts published from 2007 and policy rate becomes main instrument in 2008||loose inflation targeting LIT|
|2011-17||inflation targets hit each year except 2017 when medium-term expectations remain anchored; inflation targeting framework more complete and comparable to elsewhere, with improved communication||full inflation targeting FIT|
Selected IMF references: RED 1980 pp34-41; RED 1983 pp70-3; RED 1990 pp34-5; RED 1995 chapter I; SI 2000 chapter VI; SI 2002 pp94-6; SR 2003 pp9, 12, 22-4, 30; SR 2006 p4; SR 2009 p18; SR 2011 p17; SR 2017 pp17-19, 31; SR 2018 pp18, 34.
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