The Bank of Mexico is expected to cut its benchmark interest rate by 50 basis points at its upcoming meeting on March 27, bringing it to 9%. This prediction is supported by a recent Reuters poll amid slowing inflation and a weak economic outlook.
Out of 25 economists surveyed, 23 anticipate the central bank will implement a 50 basis point cut, similar to the move made in February, accelerating a rate-cutting cycle that began last year when the rate reached a record 11.25%. The remaining two economists predict that Banxico will keep rates steady, a position that aligns with recent indications from the Federal Reserve regarding ongoing uncertainties tied to U.S. tariff policies.
At its last monetary policy meeting, Banxico signaled that it would consider future rate adjustments akin to its February reduction if inflation conditions permit. The annual headline inflation rate has been on a downward trend since peaking at 8.7% in 2022, the highest level seen in over twenty years. As of February, inflation stood at 3.77%, within Banxico's target of 3% plus or minus one percentage point.
On Monday, the national statistics agency is set to release data for the first half of March. James Salazar, deputy director of economic analysis at CIBanco, noted that "the inflation scenario hasn't changed," suggesting that the prospects for another 50 basis point cut remain strong.
Although economic growth does not fall within Banxico's direct mandate, weak projections for Latin America’s second-largest economy—compounded by tariff threats—may exert additional pressure on the central bank to continue lowering borrowing costs. Mexico's gross domestic product shrank in the fourth quarter for the first time in over three years.
Among 17 analysts providing predictions for Banxico's next decision on May 15, all but one foresee another rate cut, although opinions vary regarding the extent of the reduction. The key rate is projected to close the year at 8.25%, which would represent its lowest level in nearly three years, according to the median forecast from 19 contributors for the final quarter of 2025.