Mexico cuts key interest rate for first time since 2009

Mexico's central bank lowered its benchmark lending rate by 50 basis points Friday to 4.0 percent in the first such adjustment in nearly four years. It did so because inflation is under control and the bank wants to adjust to a scenario of lower economic growth, the bank said. The reduction of the rate that the bank charges commercial banks on overnight loans does not, however, signal the start of a cycle of cuts in this rate, the Bank of Mexico said in a statement. Mexico ended 2012 with inflation of 3.57 percent. For this year the goal is around 3 percent. As of February it was running at an annual rate of 3.55 percent. Following the announcement, the Mexican stock exchange gained slightly, closing 0.8 percent higher, while the peso also gained 1.01 percent, closing at 12.38 per dollar. The world economy continues to show signs of weakness and short term risks for Mexico include the impact of deep cuts in government spending by the United States, where $85 billion in automatic cuts go into effect this fiscal year, the bank said. The Mexican central bank's benchmark rate had been at 4.5 percent since July 2009.