Galia Borja, a member of the Banco de México (Banxico) board, recently stated that the central bank has the capacity to further reduce interest rates given the current state of the economy. She noted that factors such as decreased consumer spending, dwindling investment, and an appreciating peso relative to the dollar indicate that there are no substantial price pressures impending in the short-term horizon. This is significant considering that Banxico had paused its extended cycle of monetary easing only weeks earlier.

Borja emphasized that maintaining a high, restrictive interest rate is crucial when faced with demand shocks or deteriorating expectations, situations which she believes are not present in Mexico at this time. The bank’s primary objective, as highlighted by her, remains to bring down general inflation, which has been consistently registering below the 4% upper limit of its target range for several months.

The implications of Borja's comments suggest a potential shift in monetary policy aimed at supporting economic recovery, particularly in light of the weak domestic economy. If Banxico indeed opts for interest rate cuts, it could stimulate spending and investment but would also need to be carefully balanced against inflation concerns as the economy navigates its recovery process.