Mexico President Backs Cenbank Hikes Over Inflation, But Slams Board Member

“I respect that decision they’re taking because inflation must be kept under control,” he told a regular news conference. “This should be something that matters to all of us.”

Inflation in July stood at 5.81%, well above the bank’s target of 3%, and the bank last week raised its key interest rate by 25 basis points to 4.5%. More rate increases are expected this year.

Lopez Obrador said the bank should be attentive to both inflation and growth, saying: “For a long time, they’ve only dealt with inflation, they don’t look at growth, but that’s an outside point of view.”

Mexico’s economy slumped 8.5% in 2020, hit by the coronavirus pandemic, and the government expects it to grow around 5% to 6% this year.

Lopez Obrador also took aim at deputy central bank governor Gerardo Esquivel for criticizing his proposal that the Bank of Mexico use money disbursed by the IMF to pay off public debt in order to save interest.

Esquivel, a left-leaning economist whom the president had initially tapped as deputy finance minister before he nominated him to the bank’s board, had said it was unfeasible by law.

“I am seeing Gerardo Esquivel, who has already become a technocrat, saying you can’t do what the president is proposing. You can’t because you don’t want to, because with all due respect, they are very square,” said Lopez Obrador.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Dave Graham, Ana Isabel Martinez and Cassandra Garrison; Editing by Nick Macfie)