Inflation Leads to Lower Interest Rates

Banxico reduced in 25 base points its interest rate, being the fifth reduction in a row. The Governor of Banxico says the monetary policy will depend on inflation rather than economic growth. Also, IMEF has proposed new initiatives to boost investment in the country. Also, the Mexican fintech industry is growing and becoming one of the most important hubs in the world.

In case you missed it, this is what made the headlines over the week!

• Banxico reduced the interest rate to 7 percent, 25 base points less, making it the fifth reduction in a row. While President López Obrador said it was not a requisite for Banxico to consider economic growth, he celebrated that the central bank is considering this in its decisions. However, Alejandro Díaz de León, Governor of Banxico, said the bank’s decisions on monetary policy depend on inflation rather than economic growth. Díaz de León also announced that the bank will make a revision of the country’s inflation in 2020 and at the same time reduce its growth estimations.
• Mexico City’s income fell 2 percent in 2019. The total income during 2019 accounted to MX$245.04 billion (US$13.2 billion), which is a 2 percent fall in real terms compared to 2018. The fall is a result of lower tax collection, which is associated to weaker economic performance and cuts in federal budgets. 
• IMEF presented to the government a series of proposals that aim to boost investment in different sectors to reactivate the country’s economy. The proposal includes changes in different sectors such as tax, energy, infrastructure and pensions. According to Ángel García-Lascuarin, President of IMEF, proposals maintain a focus on social development with the participation of the private sector.
• CCE wants to re-position the role of the private sector in society. The business organization presented a decalogue of responsibility that they hope will help them position as a key player in reducing poverty. CCE’s commitment includes raising wages, guaranteeing job opportunities, creating social inclusion and economic growth. You can read the full document here.
• According to KPMG, Mexico can soon become one of the most important fintech hubs in the world. According to the consulting company, Mexico managed to gather the needed elements so companies from the fintech sector in Mexico can soon operate at the same level as their Asian counterparts.