Interest Rate Dilemmas: Banxico's Cautious Path amid Inflation Changes

The Bank of Mexico is wary of rapidly easing interest rates despite slowing inflation. With annual inflation dipping to 4.56%, another rate cut seems probable at Banxico's meeting on December 19. However, board members urge caution, reflecting recent global financial volatility and lessons from Brazil's fiscal policy reversal.

The Bank of Mexico's governing board is cautiously optimistic as easing inflation indicates potential for further interest rate cuts, according to minutes from the bank's recent policy meeting.

While Banxico lowered its rate to 10.25% amidst headline inflation decreasing to 4.56%, discussions stress prudence due to global market uncertainties.

Lessons from Brazil's fiscal shift highlight risks of premature easing, with Banxico prioritizing a steady approach to hitting its inflation target.

(With inputs from agencies.)