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Mexico rate cut not enough to boost growth -central bank deputy

Tuesday, 29 Oct 2013 | 10:25 AM ET

MEXICO CITY, Oct 29 (Reuters) - Mexico's decision to cut interest rates last week is not enough to guarantee strong growth, a central bank board member was quoted as saying on Tuesday as he urged the government to carry out reforms to support the economy.

Mexico's central bank lowered interest rates on Friday for the second month in a row to a record low of 3.5 percent after the economy contracted for the first time in four years during the second quarter.

Speaking at an event late on Monday, Manuel Ramos said the 25 basis point cut was aimed at boosting internal demand and lowering the production gap due to the weak economy, according to Mexican newspaper El Economista.

"However, the central bank move is not sufficient for profound economic growth," he said, pointing to structural reforms as a key ingredient to growth.

Mexico's President Enrique Pena Nieto has proposed a host of reforms aimed at spurring growth in Latin America's second largest economy, including bids to boost production at state oil giant Pemex and increase the country's weak tax take.

"Economic rules are changing all over the world, and that is why reforms like those Mexico is discussing are necessary," said Ramos. "One is not enough, it's the combination of all of them that will have a positive effect."

Early on Tuesday, two Senate committees passed a package of measures aimed at improving the tax take, sending the bill to the Senate floor for a full vote later in the day.