Banxico reduces its benchmark rate by 25 basis points to 6.50%, as anticipated.
Banxico lowered its benchmark rate by 25 basis points to 6.50%, marking a second straight cut. The move matches analysts’ consensus and brings total reductions this year to 50 bps. Officials cited a moderating inflation outlook while noting inflation remains above the 3% target. Headline inflation fell to 4.4% in February, down from an 8.7% peak, and core inflation slipped to 4.1%. Banxico now expects headline inflation to reach 3% by Q2 2026, slightly earlier than earlier forecasts. Nevertheless, the board warned that upside risks persist, including services inflation, possible peso depreciation, and fiscal uncertainty. The peso traded flat against the dollar, reflecting the fully priced‑in nature of the cut. Mexican 10‑year bond yields dipped 3 bps to 7.82%, indicating expectations of further easing. Some economists forecast another 25‑bp cut in May, though a stronger peso or renewed inflation pressure could halt the cycle. Lower borrowing costs give modest relief to households and businesses, trimming mortgage and loan rates. The central bank stressed a data‑dependent approach, avoiding a predetermined easing path. Future cuts will hinge on inflation progression, exchange‑rate moves, and global conditions.
