The Bank of Mexico announced on Thursday the possibility of further reductions in the benchmark interest rate at upcoming monetary policy meetings, with adjustments potentially matching the recent 50 basis point cut.
Referred to as Banxico, the Mexican central bank reduced its key rate to 9.50% by 0.5% on February 6, in response to a cooling inflation rate and a slight contraction in the economy at the end of last year.
A board member mentioned that with progress in disinflation, a comparable rate cut could be contemplated at the following policy meeting, as indicated in the minutes of the February session.
Banxico is set to reveal its next monetary policy decision on March 27.
The 50-basis-point reduction in February surpassed the 25-point decreases previously implemented by Banxico, starting from a record high of 11.25% in March 2024.
In addition to economic concerns, Banxico highlighted a slowdown in Mexico's economy in the fourth quarter of 2024, with many board members noting a GDP contraction compared to the preceding quarter.
The central bank pointed out global uncertainties, particularly related to potential policy changes by the new U.S. administration, leading to lower growth projections that could continue to impact inflation negatively.
Banxico stressed the importance of focusing on measures that drive inflation convergence, while some members warned against hasty decisions that could result from trade policy uncertainty.