Bank of Mexico Cuts Interest Rate in Split Vote, Ending Easing Cycle
The central bank cited easing inflation and a weak economy as it projected 2026 headline inflation at 4.1% and kept guidance at 6.50%.
- On Thursday, Banxico cut its benchmark interest rate by 25 basis points to 6.50% in a 3-2 vote, ending an over two-year-long easing cycle as it balances inflation concerns with economic weakness.
- Mexico's economy shrunk 0.8% in the first quarter due to falling manufacturing and agricultural activity, prompting the board to prioritize addressing weak growth over lingering inflation concerns.
- Mexico Governor Victoria Rodriguez, Omar Mejia, and Gabriel Cuadra voted for the cut, while Deputies Jonathan Heath and Galia Borja opposed it, arguing the board needed more time to evaluate inflation risks.
- President Claudia Sheinbaum supported the cut, citing April's inflation decline, but Gabriela Siller, Banco Base's economic analysis director, called it a "mistake" sending a "misguided signal" to markets.
- Headline inflation slowed to 4.45% in April, remaining above the 3% target, though The Bank estimates inflation will return to target by the second quarter of next year.
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Despite slightly increasing its inflation expectations, the Board of Directors of the Banco de México (BdeM) decided yesterday by majority to lower its benchmark interest rate by a quarter of a percentage point to 6.5 percent, thus terminating the cycle of cuts.
Banxico Cuts to 6.50% and Closes Two-Year Easing Cycle
The Banco de México (Banxico) cut its benchmark interest rate by 25 basis points to 6.50% on May 7 in a split 3-2 vote and explicitly closed the easing cycle it began in March 2024, after 14 consecutive reductions taking the rate down 475 basis points from the 11.25% peak. Governor Victoria Rodríguez Ceja and […] The post Banxico Cuts to 6.50% and Closes Two-Year Easing Cycle appeared first on The Rio Times.
In its communiqué, the Governing Board stressed that 'it will be appropriate to maintain the reference rate at its current level', which in practice puts an end to the cycle of cuts.
UPDATE 2-Bank of Mexico cuts interest rate in split vote, ending easing cycle
The 3-2 decision by the central bank’s five-member board had been largely expected, bolstered by data released earlier on Thursday showing headline inflation slowed in April for the first time since December. Bank of Mexico Governor Victoria Rodriguez, along with deputy governors Omar Mejia and Gabriel Cuadra, voted in favor of the 25-basis-point cut.
Bank of Mexico cuts interest rate in split vote, ending easing cycle
The Bank of Mexico cut its benchmark interest rate in a split decision on Thursday and said it was ending an over two-year-long easing cycle as it balances concerns over above-target inflation with pressure to revive Mexico's slowing economy.
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