FX.co ★ Banxico Cuts Interest Rate to 7.5%, as Expected

The Bank of Mexico reduced its benchmark interest rate by 25 basis points to 7.5% during its September meeting, aligning with market expectations and marking its lowest point since May 2022. This decision signals the possibility of further rate cuts in future meetings. The move reflects ongoing concerns about global trade tensions and the country's tepid economic growth. In a statement on Thursday, the central bank cited "weak economic growth" and fluctuating global trade policies as key considerations for lowering borrowing costs. Recent data from Wednesday revealed that annual core inflation rose to 4.26% in the first half of September. Banxico aims for an inflation target of 3%, with a tolerance range of one percentage point either side. Additionally, headline inflation increased to 3.74% in mid-September, up from 3.49% in early August. On Thursday, in its revised inflation forecasts, Banxico adjusted its projection for year-end annual core inflation to 4.0% in the fourth quarter, compared to a previous estimate of 3.7%.