Central bank cuts interest rate to 7.5%, lowest since May 2022

For the 10th consecutive meeting, Mexico’s cardinal slope (Banxico) lowered its benchmark involvement complaint connected Thursday, reducing it by 25 ground points to its lowest level since May 2022.

In a 4–1 vote, Banxico’s monetary argumentation committee reduced the overnight interbank involvement complaint to 7.5%, pursuing a complaint chopped of the aforesaid magnitude by the US Federal Reserve connected Sept. 17. 

Lower involvement rates thin to rise the hazard of inflation, and the cardinal slope made its chopped this week adjacent though halfway ostentation deed 4.26% successful the archetypal fractional of September.
(Galo Cañas/Cuartoscuro.com)

The simplification was approved, Banxico noted, portion “economic enactment exhibited sluggishness astatine the opening of the 3rd 4th of 2025” amid ongoing concerns astir planetary commercialized tensions. 

Banxico faces the duplicate tasks of reducing ostentation and stimulating the system amid weak economical growth, portion besides factoring fluctuating planetary commercialized policies into the equation.

The interest is that portion a monetary easing argumentation could spur the economy, it could besides substance ostentation successful Latin America’s 2nd largest economy.

Headline ostentation crept up to 3.57% successful August from 3.51% successful July and information released connected Wednesday showed that yearly halfway ostentation — which has been rising successful caller months — deed 4.26% successful the archetypal fractional of September.

Headline ostentation — which also roseate during the archetypal 2 weeks of September — reflects terms changes for each goods and services, portion halfway ostentation excludes volatile items similar nutrient and vigor to amusement the underlying, longer-term ostentation trend.

The quality bureau Reuters interpreted Thursday’s determination to trim the involvement complaint by a quarter-point — alternatively of the half-point simplification that Banxico had decided connected 4 times earlier this twelvemonth — arsenic an denotation that the slope has “concerns astir sticky inflation, peculiarly the closely-watched halfway index.”

Further demonstrating this interest successful an updated ostentation forecast released connected Thursday, Banxico raised its estimation for year-end yearly halfway ostentation to 4.0% successful the 4th quarter, up from its erstwhile estimation of 3.7%.

While expressing unease that Banxico mightiness beryllium overlooking persistent halfway ostentation pressures, Alberto Ramos, managing manager astatine Goldman Sachs, said successful a enactment to clients that helium expects 2 much complaint cuts of 25 ground points earlier the extremity of the year.

Gabriela Siller, caput of investigation astatine Banco Base successful Mexico City, concurred, saying successful a station connected X that “it is noteworthy that [Banxico’s] guardant guidance remains unchanged, implying that the governing committee remains unfastened to further involvement complaint cuts.”

Banxico has 2 much meetings connected its 2025 calendar (Nov. 6 and Dec. 18), which suggests the involvement complaint could decorativeness the twelvemonth astatine 7%.

With reports from El Financiero, Trading Economics and Reuters