López Obrador said he agreed with the cut in Banxico's interest rate

MEXICO CITY.- During his usual morning press conference, this Friday, the president of Mexico, Andrés Manuel López Obradorcelebrated the cut to the interest rate that announced the Bank of Mexico (Banxico), although he considered it a “daring” to contrast with the decision of the Federal Reserve of USA (Fed) to keep it the same.

“It was daring. They demonstrated, and I agree, that they are autonomous and professional, but it was audacious because the rates in the United States do not want to be moved and here they are already lowering them, even if it is just a little, and this could have led to a depreciation of the peso in relation to the dollar ”said President López Obrador.

The president referred to the decision of the central bank, which lowered the interest rate by 25 basis points to 11% on Thursday, the first cut after a year of having been at the highest level in its history.

The decision contrasted with that of the Fed, which on Wednesday kept the rate for the fifth time in a range of 5.25% to 5.5%, although it anticipated three cuts during the year.

Fear over the effect of Banxico’s monetary policy

López Obrador expressed his concern about the possible effect of Banxico’s monetary policy about him exchange ratebut he clarified that “nothing happened, it did not move” as it now stands at 16.71 Mexican pesos per US dollar, 1.94% less than on the first day of the year.

Likewise, the president said that “it does help to lower rates because that means that you can invest” and “it helps people, and businessmen, to invest.”

“And it also helps us, all Mexicans, in the case of public finances, because 70% of the debt contracted by Mexico is in pesos and, when the rate goes down, it goes down, in the case of variable interests, the amount of our debt, even if it is small, so it was a good decision,” he noted.

Fight inflation

The Mexican leader has previously criticized the “orthodox” policy of raise rates to combat inflationwhich rebounded in the first fortnight of March at 4.48% annualthus breaking three fortnights of decline, as reported this Friday by the National Institute of Statistic and Geography (Inegi).

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