Mexico central bank has room to lower benchmark rate as economy slows, Heath says

By Ana Isabel Martinez and Aida Pelaez-Fernandez

MEXICO CITY, May 7 (Reuters) - There is still room for Mexico's central bank to lower its benchmark interest rate as the country's economy slows, deputy governor Jonathan Heath said in a podcast with lender Banorte published on Wednesday.

Last month, the Bank of Mexico cut its interest rate 50 basis points to 9% in a unanimous decision, while its board also warned of economic uncertainty linked to trade tensions worldwide.

In all scenarios, the central bank expected a slowdown in Mexico's economy, as well as in the United States, Heath said.

Heath said that a stagnant economy leads to lower inflationary pressures, giving the bank room to take a less restrictive monetary stance.

Several indicators such as industrial production and business confidence have already shown deterioration, he said.

In the face of risks linked to tariffs imposed by the U.S., "we're still taking a restrictive monetary stance, but less and less restrictive than previously expected," Heath said.

That uncertainty likely will not translate into a major acceleration of inflation in Mexico, he added.

In the second half of the year, however, the central bank's decisions will require more caution, Heath said.