26.06.202519:26:06UTC+00Banxico Cuts Interest Rate to 8%, as Expected

The Bank of Mexico reduced its benchmark interest rate by 50 basis points to 8.00% on June 26th. This decision followed an increase in annual inflation to 4.51% by mid-June and a moderate expansion of the domestic economy in April, despite lingering economic slack. The announcement highlighted the possibility of additional 50 basis point reductions, suggesting that the ongoing disinflation process might permit further easing measures, albeit in a controlled manner. Nevertheless, the central bank remains vigilant in light of significant global uncertainties—including trade disputes and geopolitical tensions—that could potentially trigger inflation through the depreciation of the peso or exacerbate the economic deceleration. Although the trajectory towards achieving the 3% inflation target is progressing as anticipated, with expectations of reaching this goal by the third quarter of 2026, board members emphasized the need for a flexible policy approach to manage inflation expectations and safeguard financial stability, especially in the context of the recent appreciation of the peso.