Mexico City (AFP) - Mexico’s central bank cut its benchmark interest rate for the fifth straight time on Thursday in a fresh bid to kick-start a stagnating economy.

“Economic activity in Mexico has remained stagnant for several quarters and with widespread weakness in the components of aggregate demand,” said the central bank in a statement.

The bank dropped interest rates by 25 points to seven percent despite inflation rebounding in January to an annual rate of 3.24 percent, its highest in six months.

The central bank said growth will be lower than it previously expected in a report at the end of November, when it predicted GDP would grow between 0.8 and 1.8 percent.

Mexico’s economy shrunk by 0.1 percent in 2019, according to preliminary official figures, its first drop in a decade.

That decline was a blow to left-wing President Andres Manuel Lopez Obrador, who assumed office in December 2018 and had promised two percent growth.

He also said he expected GDP to grow by an average four percent over his six-year mandate, which experts say is looking highly unlikely.

Meanwhile, the bank said it hopes inflation will accelerate.