A Reuters poll revealed that on March 27, Banco de Mexico (Banxico) is expected to cut interest rates by 50 bps amid the evolution of the disinflation process and an ongoing economic slowdown.
Economists expect rates to get as low as 8.25% in 2025
Of 25 economists, 23 expect the central bank to lower borrowing costs by 50 bps, from 9.50% to 9.00%. The other two economists estimate the Mexican central bank will keep rates unchanged.
This would be the second rate cut of that size, following February’s meeting in which the Governing Council approved reducing the main reference rate from 10.00% to 9.50% on a 4 to 1 vote split, with Deputy Governor Jonathan Heath dissenting, as he voted to reduce rates by 25 bps.
Even though Banxico’s mandate is to control inflation, the recent economic slowdown prompted the Mexican institution to ease policy, as policymakers justified that as the economy cools, so it does inflation.
Alongside this, Mexico’s economic docket is busy next week, with the release of March mid-month inflation, Retail Sales, and Trade Balance data.
Banxico FAQs
What is the Bank of Mexico?
The Bank of Mexico, also known as Banxico, is the country’s central bank. Its mission is to preserve the value of Mexico’s currency, the Mexican Peso (MXN), and to set the monetary policy. To this end, its main objective is to maintain low and stable inflation within target levels – at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%.
