Mexico | Banxico wraps up 50bp cuts, more gradual easing ahead

Summary

The upcoming minutes will be key to gauge to what extent most members remain focused on the weak growth outlook and how confident they are that the current degree of monetary restriction remains inconsistent with prevailing conditions and risks.

Key points

• Key points:
• Banxico cut the policy rate by 50bp to 8.00%; the decision was not unanimous, Jonathan Heath had publicly disclosed in advance his intention to dissent.
• It revised its short-term inflation forecasts upward, particularly for 2Q25 and 3Q25, but still expects core inflation to hit the midpoint 3% target by 3Q26.
• The statement’s forward guidance turned significantly more cautious, opening the door not only to a slower pace but also to a potential pause.
• Despite the shift to a less dovish tone, we continue to expect Banxico to deliver four additional consecutive 25bp rate cuts this year.
• Our baseline remains that the policy rate will reach 7.00% by year-end, near the upper end of Banxico’s estimated neutral range.

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