(Recasts to lead with external effects on peso, comments on spending)
By Dave Graham
MEXICO CITY, May 6 (Reuters) - While domestic growth and inflation do not suggest the need to move interest rates, Mexico’s central bank may have to act fast if external conditions hit the peso and inflation expectations, bank governor Agustin Carstens said on Wednesday.
Speaking at an event in Mexico City, Carstens said Mexico was on target to meet its inflation goals, noting that aggregate demand is not growing fast enough to push up prices.
Mexico’s peso has been hammered by a slide in global oil prices that has forced the government to slash its spending projections.
The central bank held borrowing costs steady last week at 3.0 percent, pointing to persistently sluggish economic growth and noting that inflation pressures remained muted following a deep slump in the peso.
Carstens added it was advisable for the government to keep spending in line with its plans, and that Mexico’s landmark energy sector opening needs to be implemented as soon as possible.
Carstens also said he thought the economy was growing but not as fast he would have liked. Certain economic data, such as industrial output, was not as strong as he might wish, he noted.
In a reform finalized last year, Mexico opened its hidebound oil, gas and electricity sectors to outside investment in the hope of kick-starting long-lagging growth in Latin America’s No. 2 economy. (Writing by Gabriel Stargardter; Editing by Simon Gardner and Meredith Mazzilli)