The Central Bank of Mexico (Banxico) cut the basic interest rate by 25 basis points (bp), to 7.25% per year, in a decision with a dissent in favor of maintenance. In a statement, the monetary authority stated that it hopes to implement additional reductions.
The BC reported that, since the last monetary policy decision, interest rates on short- and medium-term government bonds in Mexico have decreased, while long-term rates have registered modest increases.
The Mexican peso depreciated slightly, economic activity contracted in the third quarter and the uncertain environment continues to pose significant downside risks, he added.
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The statement also highlighted that Banxico considers it appropriate to continue the cycle of reference rate reductions. “For the future, the Board of Governors will consider further cuts in the basic interest rate and will take into account the effects of all determinants of inflation,” he stated, reiterating the goal of achieving inflation at 3% “within the expected deadline.”
