Bank of Mexico Lowers Interest Rate Amid Easing Inflation

The Bank of Mexico cut its benchmark interest rate by 25 basis points for the second consecutive time, aligning with forecasts and following the U.S. Federal Reserve's earlier rate reduction this month. The decision saw mixed opinions among the governing board, but future rate cuts are anticipated as inflation continues to ease.

The Bank of Mexico reduced its benchmark interest rate by 25 basis points on Thursday, marking the second straight cut as inflation in Latin America's second-largest economy continues to ease. This followed the U.S. Federal Reserve's aggressive rate cut earlier this month.

The central bank's five-member governing board was not in unanimous agreement, with Deputy Governor Jonathan Heath casting the sole vote against the rate reduction, advocating for maintaining the previous rate of 10.75%. Most analysts, however, had accurately predicted the 25-basis-point cut, according to a Reuters poll.

Banxico, as Mexico's central bank is known, stated that the inflationary environment is likely to permit further reference rate adjustments in the future. Official data revealed that annual headline inflation slowed to 4.66% in the first half of September, marking the fourth consecutive fortnight of declines, while core inflation moderated to 3.95%, the lowest level since early 2021.