Mexico | Banxico lowers policy rate for the first time since March in a split decision

Summary

Banxico looked past the jump in headline inflation, rightly so in our view, with core inflation easing and cut the policy rate by 25bp to 10.75%, as we anticipated. It anticipates that lower inflation pressures may allow further rate cuts going forward.

Key points

• Key points:
• The wording of the statement remained cautiously dovish and dismissed the two factors that could have made Banxico pushed back today’s rate cut.
• The forward guidance continued to leave the door wide open for further cuts going forward.
• Looking ahead, Banxico’s Board members will likely continue to have differing points of view in terms of the inflation outlook, likely leading to additional split decisions in future meetings.

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