Banco de México (Banxico) cut its benchmark overnight rate to 6.25% Thursday, a split decision that came as it raised its forecast for fourth-quarter inflation.
The bank announced the 3-2 decision Nov. 5; the lower rate became effective Nov. 6. Governing Board members Victoria Rodríguez Ceja, José Gabriel Cuadra García and Omar Mejía Castelazo backed the cut, while fellow board members Galia Borja Gómez and Jonathan Heath voted to keep the rate at 6.50%.
A Citi survey published Nov. 4 found that 20 of 36 respondents expected no change at the meeting, while six projected a cut and 10 expected the next rate move in 2027. The median forecast for the policy rate at year-end was 6.50%, with estimates ranging from 6.25% to 6.50%.
Banxico raised its fourth-quarter 2026 average annual headline inflation projection to 3.7% from 3.5%, and its core inflation projection to 3.7% from 3.6%. It kept both estimates for fourth-quarter 2027 at 3.0%. In the first fortnight of October, annual headline inflation was 3.62%, up from 3.42% in the first fortnight of September; core inflation eased to 3.78% from 3.79%.
The Governing Board described the reduction as a “one-time adjustment” and said holding the rate at its new level for an extended period should help bring inflation back to target over time. It judged that disinflation was continuing and monetary restriction remained in place. The board said Mexico’s economy expanded in the third quarter, but slack was expected to persist and it saw no current demand-side pressures. It listed persistent core inflation, possible further peso depreciation, trade-policy or geopolitical disruptions, climate effects and cost pressures as upside risks.
EconoTimes previously reported on the peso’s decline ahead of Mexico’s rate decision. Banxico’s calendar lists publication of the meeting minutes for Nov. 19 and its next rate decision for Dec. 17.
