Mexico’s Lopez Obrador Backs Banxico Efforts to Tame Inflation

(Bloomberg) -- Mexican President Andres Manuel Lopez Obrador said Wednesday he supported the central bank’s recent efforts to control inflation, given their importance in helping the nation’s poor.

“It’s important that Banco de Mexico acts so there’s control over inflation,” Lopez Obrador said in response to a question by Bloomberg News at a daily press conference. If salaries and income rise, “but we don’t have inflation under control, we don’t increase purchasing power.” 

Mexico’s central bank, known as Banxico, has raised its interest rate by a quarter point in two straight meetings as annual inflation runs at roughly double the official target. Policy makers had previously not delivered a borrowing cost increase since 2018. The five-member board was split in the last two decisions, with Lopez Obrador appointees Gerardo Esquivel and Galia Borja opposing the hikes. 

Lopez Obrador, who came to power promising to fight poverty, said that despite the government’s sharp increases in the minimum wage, the lowest earners still aren’t able to buy a lot more goods due to high inflation.

The president said he planned to ask the central bank for a $12 billion windfall paid out by the International Monetary Fund. Central bank Governor Alejandro Diaz de Leon told Bloomberg News last week that the government would have to buy the funds from the bank’s dollar reserves.

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