National bank cuts interest rates 50 basis points to 8.5%

The Bank of Mexico’s cardinal involvement complaint volition autumn to 8.50% aft the cardinal bank’s governing committee unanimously supported a 3rd successive 50-basis-point chopped connected Thursday.

The 5 members of the committee voted successful favour of the chopped contempt an uptick successful ostentation successful April.

With the yearly header ostentation complaint inactive wrong the Bank of Mexico’s 2%-4% people range, the marketplace was anticipating the board’s latest decision.

The 8.50% benchmark complaint — the lowest complaint successful astir 3 years — volition instrumentality effect this Friday. The latest chopped comes aft 50-basis-point reductions successful February and March.

The Bank of Mexico (Banxico) said successful a connection that the governing committee “took into relationship the behaviour of the [USD:MXN] speech rate, the weakness of economical enactment and the imaginable interaction of changes successful commercialized policies worldwide” erstwhile assessing whether to set the benchmark involvement rate.

“Considering the existent inflationary outlook and the prevailing level of monetary restriction, with the beingness of each its members, the Board decided unanimously to little the people for the overnight interbank involvement complaint by 50 ground points to 8.50%,” Banxico said.

Con la presencia de todos sus miembros, la Junta de Gobierno del #BancodeMéxico decidió por unanimidad disminuir la Tasa de Interés Interbancaria a 1 día, a un nivel de 8.50% con efectos a partir del 16 de mayo de 2025. Consulta el comunicado en: https://t.co/5I8HUr8Svr pic.twitter.com/kQMEOXezi4

— Banco de México (@Banxico) May 15, 2025

The cardinal slope indicated that further 50-basis-point cuts are likely.

“The Board estimates that looking up it could proceed calibrating the monetary argumentation stance and see adjusting it successful akin magnitudes. It anticipates that the inflationary situation volition let to proceed the complaint cutting cycle, albeit maintaining a restrictive stance,” Banxico said.

The governing board’s adjacent monetary argumentation gathering is scheduled for June 26.

Banxico’s cardinal involvement complaint was held astatine a grounds precocious of 11% for a afloat twelvemonth earlier an easing rhythm began successful March 2024 with a 25-basis-point cut. Mexico’s yearly header ostentation complaint roseate to a two-decade precocious of 8.7% successful the 2nd fractional of 2022.

The yearly header complaint was 3.93% successful April, up from 3.80% successful March and 3.77% successful February. Banxico targets 3% inflation, but considers immoderate complaint betwixt 2% and 4% to beryllium wrong its acceptable range.

The outlook for inflation 

Banxico forecasts that the header ostentation complaint volition autumn to 3.5% successful the 3rd 4th of 2025 earlier declining to 3.3% successful Q4.

The cardinal slope predicts that ostentation volition proceed to autumn successful 2026 to scope 3% successful the 3rd 4th of adjacent year.

Banxico’s outlook extends to the archetypal 4th of 2027, astatine which constituent it forecasts that yearly header ostentation volition inactive beryllium astatine the 3% people rate.

Peso closes astatine 19.50 the dollar 

After closing astatine 19.38 to the dollar connected Wednesday, the peso depreciated connected Thursday up of Banxico’s involvement complaint announcement.

The Bank of Mexico’s closing USD:MXN complaint connected Thursday was 19.50.

The peso has performed good compared to the greenback this year, remaining beneath 20 to the dollar since mid-April. (Shutterstock)

The peso connected Wednesday reached its strongest presumption since October, the period President Claudia Sheinbaum took office.

The currency has performed good this twelvemonth aft depreciating importantly successful 2024 owed to a scope of factors including the ruling Morena party’s broad triumph successful Mexico’s 2024 elections past June, Congress’ support of a arguable judicial reform and Donald Trump’s triumph successful the U.S. statesmanlike predetermination past November.

Since Trump took office, the peso has appreciated 6.5% against the greenback, contempt the U.S. president imposing tariffs connected a scope of Mexican goods, including steel, aluminum, vehicles and products not covered by the USMCA escaped commercialized pact.

Mexico News Daily