Mexico’s central bank cut its overnight rate to 6.25% after considering an adjustment since September, Governor Victoria Rodríguez Ceja told El Financiero, describing the path to last week’s closely divided policy decision.
The Bank of Mexico (Banxico) lowered its overnight interbank rate by 25 basis points, from 6.50% to 6.25%, in a 3-2 vote on Nov. 5; the new rate took effect Nov. 6. Rodríguez, José Gabriel Cuadra García and Omar Mejía Castelazo backed the reduction. Galia Borja Gómez and Jonathan Heath voted to keep the rate at 6.50%. EconoTimes previously covered the Nov. 5 rate decision.
El Financiero published Rodríguez’s account on Nov. 8. She said the board revisited the possibility of easing after evaluating the inflation outlook and its drivers. Banxico’s minutes from the Sept. 23 meeting show that the board held the rate at 6.50%; the decision was announced Sept. 24.
Those minutes, released Oct. 8, record board members discussing a possible reduction under certain conditions. One view was that policymakers could consider a cut if circumstances permitted; another was that the option should remain open depending on inflation and orderly financial markets. The minutes do not identify which members made those comments.
Headline inflation climbed to 3.62% from 3.42% between the first fortnights of September and October, while core inflation eased to 3.78% from 3.79%. Banxico said higher non-core inflation accounted for the headline increase, while disinflation continued.
Banxico also cited slack in economic activity, a lack of current demand-side pressure and limited pass-through from exchange-rate movements. Its statement said staying at 6.25% for an extended period would help return inflation to target and address challenges in the external environment.
Banxico’s calendar lists the Nov. 5 meeting minutes for publication on Nov. 19, with the next monetary policy announcement scheduled for Dec. 17.
