Historic Interest rate increase/Fuel subsidies in the US

Historic Interest rate increase. President López Obrador said he respects the autonomy of Banxico, nevertheless, asked the institution to seek other measures to control inflation. He requested that instead of increasing reference interest rates, Mexico´s central bank should look for another initiative that does not stop economic growth. He mentioned that his government will boost the production of basic grains such as corn, beans and rice to foster national consumption and reduce food imports like yellow corn used to feed livestock.

Yesterday, Banxico elevated its reference interest rate by 75 base points to 7.75 percent, its highest level since 2019. The banking institution reported inflation could be further increased due to worsening inflation expectations.

Fuel subsidies in the US. The President celebrated the proposal of President Joe Biden of granting a subsidy to fuel, similarly to what has been implemented in Mexico. Nonetheless, he regretted that democrat legislators do not always support his initiatives. In addition, he reported that inflation in Mexico is less than in the US and Europe.

Dos Bocas Refinery over Budget. President López Obrador admitted that the construction of the Dos Bocas Refinery in Tabasco will cost more than what was originally priced at. He informed that the refinery will cost approximately US$12 billion instead of the US$8 billion previously expected. Nonetheless, he said that the new budget was approved by PEMEX and it adjusts to its budget. The president added that Dos Bocas will be inaugurated in the first days of July and will reach full capacity in 2023.

Bloomberg reported this week that the total costs of the construction is between US$16 and US$18 billion, more than double than the first budget presented by the current administration.

Category 1 aviation security. President López Obrador affirmed that his government is working to recover Category 1 aviation security in Mexico despite resistance from opposing parties and international organizations that are not happy that the Texcoco Airport was not built.

As part of the process for Mexico to recover category 1 aviation security, the US´ Federal Aviation Administration (FAA)informed last Thursday that in the next 30 days it will publish the results of a technical revision.

In a press release, the Federal Agency of Civil Aviation (AFAC) informed that the FAA carried out the evaluation last week and that it was summoned by the same AFAC with the participation of FAA inspectors and representatives of commercial airlines. In May 25 of 2021, the FAA decreased from category 1 to category 2 the qualification of aviation security in Mexico due to the redesign of the aerial space in the Valley of Mexico. Days after, the Ministry of Infrastructure, Communications and Transport (SICT) reported it had planned a strategy together with Mexican airlines to recover category 1.

The redesign of the aerial space was one of the modifications that originated from the construction and operational initiation of the new Felipe Angeles Airport (AIFA). 

Click HERE for full transcript in Spanish