Mexican Central Bank Implements Fourth Consecutive Interest Rate Cut

Forex - Mexico's Central Bank (Banxico) has lowered interest rates for the fourth consecutive time due to low economic growth and slowing inflation.

According to Banxico's announcement, the benchmark interest rate was reduced by 25 basis points from 10.25% to 10.00%. Market expectations also indicated a 25 basis point cut in rates.

The decision was taken unanimously by the five members of the Monetary Policy Committee. In the statement regarding the decision, it was noted, "The Committee expects that the inflationary environment will allow for further reductions in the reference rate. Given the progress in inflation, while a restrictive stance may be maintained in some meetings, larger downward adjustments could be considered."

Inflation fell to 4.55% in November after rising the previous month. Core inflation, excluding energy and fresh food prices, has steadily declined since the beginning of 2023, reaching 3.58% last month.

While Banxico may consider greater interest rate cuts in future meetings, it has raised its inflation forecasts for the second half of 2025 and the first half of 2026. The bank now expects inflation to reach the 3% target in the third quarter of 2026 instead of the fourth quarter of 2025.

The bank indicated that the possibility of the U.S. imposing import tariffs on Mexican goods adds uncertainty to the forecasts.