, a large fraction of their debt denominated in domestic currencies, and high levels of foreign exchange reserves. however, many emerging and developed economies are still heavily burdened by the debt resulting from generous fiscal support policies during the pandemic. therefore, 1 / 4 bis - central bankers'speeches high interest rates could have a strong negative impact on those economies where the debt to gdp ratio is larger. mexico is within the group of economies that maintained a strict fiscal discipline during the pandemic, which helped the country to avoid a significant deterioration of its public finances. another area of concern related to the tightening process is the increase in the value of the us dollar relative to other currencies. this might pose a risk for those economies where the financing of large firms or the public sector is heavily reliant on foreign debt. in the case of mexico, we have learned the lessons from previous crisis and have decreased our dependence on foreign debt. furthermore, the mexican peso has not experienced a depreciation against the us dollar during the current year as opposed to most of the currencies of advanced and emerging economies around the world. this is the result not only of our monetary policy stance relative to the us one, but also the result of keeping solid macroeconomic fundamentals. with regards to monetary policy, a key question is whether emerging markets should follow the fed's cycle one - to - one. in the case of mexico, with yesterday's monetary policy decision, our interest rate is now clearly in restrictive territory. in my opinion, going forward it is important to send the message that we are close to reach the terminal value of the interest rate in the current hiking cycle. for this purpose, we might decouple from the fed's pace of increases in the following decisions, as mexico would likely need smaller adjustments in its interest rate. there are several reasons for this. first, we started our tightening cycle before the fed and, thus, we are now clearly in a restrictive zone ; second, inflation in mexico is mainly explained by external shocks and supply - side factors, and less so by internal demand or market labor pressures ; third, the interest rates differential between mexico and the united states is close to its maximum level ; and fourth, mexico has maintained solid macroeconomic fundamentals which provide important support to the mexican currency. for these and other considerations, i believe that we should start reducing the pace of adjustments as soon as in our next meeting and reach a

gerardo esquivel hernandez : welcome remarks - inauguration of the 7th annual conference on international economics welcome remarks by gerardo esquivel hernandez, deputy governor of the bank of mexico, at the inauguration of the federal reserve bank of dallas – university of houston – banco de mexico 7th annual conference on international economics, mexico city, 30 september 2022. * * * i am gerardo esquivel, deputy governor at banco de mexico, and i would like to welcome you all to the 7th edition of this conference. it is a pleasure for banco de mexico to co - host this high - level event along with the federal reserve bank of dallas and the university of houston. top economists from johns hopkins, the london school of economics, penn state, princeton, rochester, stanford, ucla, university of minnesota, university of pennsylvania, university of southern california and yale, as well as from the board of governors, the minneapolis fed and the imf are slated to participate as presenters or discussants in this conference. for banco de mexico, given our economy's very high degree of trade and financial openness, an improved understanding of trade and international macroeconomic issues is always very valuable. over the years, this high - level conference has been important for us to be able to apply the latest ideas and techniques to pressing policy issues. within the last six years the bank has had to deal with the large decline in oil prices experienced in 2014 and 2015, the threat of cancelation of nafta, the threat of the imposition of various tariffs and quotas and, more recently, with the multiple shocks to global trade and financial markets that resulted from the pandemic. some of the insights gained by our participation in this conference have surely been valuable in coping with these tasks. in particular, at this stage, it is crucial to analyze the impact of the tightening process currently undertaken by central banks around the globe on financial markets and to what extent and for how long this tightening process will continue, as the global economy slows down while inflation still remains high, despite declines in energy prices and a moderation of supply chain disruptions. previous episodes of tightening by the central banks of advanced economies have coincided with episodes of fifinancial crises in emerging economies, for example in the early 80's and mid 90's. clearly, the current circumstances are different given that most emerging markets now have robust and credible macroeconomic frameworks, with monetary policy focused on price stability, contained fiscal deficits