The Bank of Mexico has adjusted its forecasts for the return to the official inflation target, which it will now no longer reach before the third quarter of 2026, after reassessing price dynamics in the domestic and international context. This new estimate is in response to recent changes in inflationary pressures and an environment characterized by global financial instability, a situation that has led the monetary authority to change both its forecast and its main policy tool, according to information disseminated by the source media.
According to the media, the Board of Directors of the Bank of Mexico decided by consensus to reduce the reference interest rate by 25 basis points to 7%. The decision was based on the resilience of a domestic economy showing signs of weakness and the high volatility of the exchange rate. The company’s statement emphasized that the international situation, characterized by the worsening turmoil in financial markets and pressure on emerging market currencies, has increased external risks for Mexico.
The institution stressed, as reported in the media, the importance of paying attention to both external factors and the possibility of changes in international trade policies, especially those of the United States, since any change in this area could affect inflation and Mexico’s macroeconomic stability. This position responds to the risks identified by Treasury, which include global uncertainty, exchange rate pressures and possible adjustments in trading partners’ economic strategies.
According to the source media, the Bank of Mexico revised its estimates of the development of national inflation during the recent monetary policy meeting. The company noted that the reduction in services prices will take longer than expected, forcing it to revise upward its overall and underlying inflation forecasts for the fourth quarter of 2025 and the two periods thereafter. This update implies that the return to inflation targeting will be delayed until well into 2026.
The media also stated that the reduction in the reference interest rate comes after a rise in general inflation, which rose from 3.63% to 3.80% between the first half of October and November. The increase in the cost of non-food goods was identified as the main cause of this increase in consumer prices. Given this phenomenon, the Bank of Mexico considered it necessary to adjust its expectations and pay particular attention to the expected slow correction in the services sector.
The possibility that the United States will make changes in its trade policy plays a central role in the central bank’s analysis, the media highlighted, since these moves will impact the Mexican and American economies. If such changes occur, it could have a direct impact on inflation developments and the structure of domestic markets, forcing the monetary authority to strengthen monitoring of both external and local economic and financial variables.
The persistent weakness of the productive sector in Mexico has influenced the position of the institution, the media say. The Bank of Mexico expects this low momentum to last at least until the last quarter of 2025. This perspective underlines the need to maintain prudent policies capable of adapting to the economic situation and the risks identified in the international and national environment.
According to the report, there has been a recent appreciation of the peso against the dollar, a phenomenon that coincided with the noted increase in inflation. Despite the exchange rate appreciation, pressure on prices remained, showing how complex the scenario is that the central bank faces to maintain macroeconomic stability.
The Board of Directors of the Banco de México expects that its future decisions regarding the pace and extent of possible additional interest rate cuts will depend on an ongoing and detailed analysis of exchange rate and inflation conditions. The adopted strategy will prioritize financial stability and compliance with inflation targets, prioritizing thorough analysis of data and taking into account any significant fluctuations that may occur in critical sectors.
The media source stated that Mexican monetary policy will closely monitor the development of global capital markets as well as possible changes in trading rules by the country’s main partners. The country’s external uncertainty and vulnerability to factors of international instability require strict monitoring of economic data with the aim of responding quickly to possible increases in inflation or abrupt changes in the global environment.
According to the media, the institution reiterated that the implementation of its monetary policy is guided by a balanced approach, capable of responding to the dual nature of the risks that exist both abroad and in the local economy. The Company will maintain its commitment to adapt its actions as circumstances evolve, prioritizing the long-term sustainability of the Mexican economy, in an international scenario that it recognizes as uncertain and subject to rapid changes.
Finally, the Bank of Mexico emphasized that the institutional priority is to support the national economy and ensure sustainability in the face of external impacts that may arise from movements in the world’s major economies. The monetary policy strategy will continue to be anchored in monitoring the stability of financial markets and in the application of measures that contribute to a gradual return of inflation within the parameters set by the Central Bank, as reflected in the source media coverage of the recent decision.
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