UPDATE 1-Bank of Mexico cuts interest rate in split vote, ending easing cycle

"Looking ahead, the Governing Board estimates that it will be appropriate to maintain the reference rate at ‌its current level," the central bank, also known as Banxico, said in a statement ‌announcing the decision. The 25 basis point cut brings the rate to 6.50%, its lowest since May 2022.

The ​Bank of Mexico cut its benchmark ‌interest rate ​in a split decision on Thursday and said it was ending an over two-year-long easing cycle as ‌it balances concerns over above-target inflation with pressure to revive Mexico's slowing economy. "Looking ahead, the Governing Board estimates that it will be appropriate to maintain the reference rate at ‌its current level," the central bank, also known as Banxico, said in a statement ‌announcing the decision.

The 25 basis point cut brings the rate to 6.50%, its lowest since May 2022. The 3-2 decision by the central bank’s five-member board had been largely expected, bolstered by data ⁠released earlier ​on Thursday showing headline ⁠inflation slowed in April for the first time since December.

Analysts polled by Reuters said ahead of ⁠the decision that the cut was likely to be the last for the foreseeable future, ​a view echoed by Bank of Mexico Governor Victoria Rodriguez, who recently said ⁠the central bank was "close to concluding the period of adjustments" to the interest rate. Rodriguez, along with deputy ⁠governors ​Omar Mejía and Gabriel Cuadra, voted in favor of the 25-basis-point cut. The bank's statement said the board members believe current monetary policy is appropriately positioned ⁠to deal with risks stemming from the broader economic environment, including the conflict in ⁠the Middle East and ⁠its repercussions. Deputies Jonathan Heath and Galia Borja voted to keep the rate unchanged.

Mexico's peso currency strengthened slightly after the decision was ‌announced.