Mexico’s central bank cuts interest rates for the 12th consecutive time | Finance

The majority of the Monetary Policy Committee considered it appropriate to reduce interest rates given the inflationary scenario, the appreciation of the exchange rate, the observed weakness in economic activity and the possible impacts of changes in trade policies globally.

“Economic policy changes by the U.S. administration continue to add uncertainty to forecasts, potentially generating inflationary pressures on both sides of the risk balance,” Banxico said.

Since the last monetary policy decision in October, inflation in Mexico increased from 3.63% to 3.80% and core inflation from 4.24% to 4.43%, mainly due to an increase in prices of non-food goods.

Inflation expectations for the end of this year fell slightly, while long-term expectations remained relatively stable, but above target. Banxico nevertheless expects general inflation to converge towards the 3% target in the third quarter of 2026.

“The projections for general and underlying inflation have been revised upwards for the fourth quarter of 2025 and for the following two quarters. This adjustment is mainly due to a more gradual reduction than expected in services inflation,” assesses the monetary authority.

Interest rates on sovereign bonds have increased across most maturities. Banxico warns that trade uncertainties continue to affect activity in the country and generate inflationary risks on both sides of the risk balance.