Claudia Sheinbaum Supports Bank of Mexico's Interest Rate Cuts

Mexican President Claudia Sheinbaum expressed approval of the Bank of Mexico's recent interest rate reductions on Friday, noting that such measures could attract investment. Banxico, the central bank, trimmed its benchmark rate by 50 basis points in June amid a split decision, with one deputy governor opposing the move. Since the beginning of 2024, the bank has decreased the key rate by 325 basis points, including 200 points this year, corresponding with a decline in inflation from 2022 peaks.

"It's the Bank of Mexico's decision to make, but I agree that the interest rate should be lowered because it helps investment. The lower the interest rate, obviously, there will be more loans and more investment in our country," Sheinbaum asserted during her usual morning press briefing. Despite the constitutional independence of Mexico's central bank, Sheinbaum's predecessor, Andres Manuel Lopez Obrador, frequently pressed for reduced borrowing costs.

Mexico's annual headline inflation exceeded the central bank's target range in May but moderated to 4.32% in June, still above the target. Sheinbaum refuted claims that the central bank's rate cuts have exacerbated inflation, likening her stance to President Donald Trump's calls for the U.S. Federal Reserve to lower interest rates to stimulate economic growth.

(With inputs from agencies.)