However, the balance of risks is moving to the downside owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility. According to Eurostat’s flash estimate, euro area annual HICP inflation declined to 2.0% in November 2018, from 2.2% in October, reflecting mainly a decline in energy inflation.
It is worth emphasizing that the Bank of Mexico does not target any level of the exchange rate. Its primary objective is maintaining low inflation, and Mexico adheres to a freely floating exchange-rate regime. This does not mean that movements in the exchange rate have no impact on inflation.