Mexico | Banxico cuts rates again; signals more easing ahead

Summary

In a backdrop of an “improving” inflation outlook and worsening growth prospects, a majority of members seem to think the central bank has ample wiggle room to cut rates. The forward guidance now strongly suggests that Banxico is set to embark in a streak of consecutive rate cuts ahead.

Key points

• Key points:
• Banxico lowered its policy rate by 25 bps for the second consecutive meeting, to 10.50%.
• In view of the lags of monetary policy, the restrictive stance is set to continue to weigh on the economy in the coming quarters.
• The wording of the statement turned more dovish but remained cautious; forward guidance signaled more confidence about the rate cut cycle going forward.
• We expect two more 25bp rate cuts in November and December, to 10.00%; our 2025 year-end forecast of 7.50% is below consensus expectations.

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