FX.co ★ Banxico Cuts Rates by 25bps to 7.25%, As Expected

In its November meeting, the Bank of Mexico opted to reduce its benchmark interest rate by 25 basis points to 7.25%, aligning with market predictions. This adjustment marks the lowest rate since May 2022 and signals potential for further easing in future sessions. The decision arises amid persistent concerns over global trade tensions and a sluggish domestic economy. In Thursday's announcement, the bank highlighted the "weakness of economic activity" and the ongoing global uncertainty as key considerations for lowering borrowing costs. Notably, from mid-September to mid-October, annual core inflation saw a modest decrease from 4.26% to 4.24%, and headline inflation dropped from 3.74% to 3.63%. In updated forecasts, the Bank of Mexico maintained its year-end projection for annual core inflation at 4.2% in the fourth quarter, expecting headline inflation to align with the 3% target by the third quarter of 2026.