Differing inflation paths...

The risk of deflation will dominate discussions in the US Federal Open Market Committee meeting today. When to take action to counter deflation and which actions to take are being openly discussed.

In contrast, in Mexico, inflation most likely has bottomed out: the annual rate in July, published yesterday, was 3.64%. In its quarterly analysis of inflation, published July 28, Banco de Mexico stayed with its projected inflation ranges, which put the average inflation rate in the fourth quarter of this year at 4.75% - 5.25%.

It would seem that the impact of the output gap and weak demand on inflation is much more restrained in Mexico than in the US. Gee, could quasi-monopolies have anything to do with that?