27.03.202519:17:06UTC+00Banxico Cuts Rate to 9.0%, Signals Further Easing

The Bank of Mexico, commonly referred to as Banxico, announced a reduction in its benchmark interest rate by 50 basis points, bringing it down to 9.00% as of March 27. This decision was made in response to a further decline in inflation and indications of ongoing economic sluggishness noted in the early months of the year. According to the announcement, several board members anticipate another similar rate cut of 50 basis points at the upcoming meeting on May 9, should the trend of disinflation continue. This suggests a potential continuation of the monetary easing cycle. Nonetheless, the central bank maintains a cautious stance due to prevailing global uncertainties, including rising trade tensions and comprehensive geopolitical risks. These factors could potentially result in inflationary pressures via currency depreciation or hinder economic growth due to increased slack in the economy. Although significant progress has been made towards achieving the 3% inflation target, board members emphasized the necessity of maintaining a flexible policy framework. This approach would allow for incremental adjustments during what they term as a "new stage" of monetary policy, all while safeguarding financial stability, especially given the current interest rate differential with the US Federal Reserve.