2025.12.1819:04:49UTC+00Banxico Cuts Interest Rate to 7%, as Expected

The Bank of Mexico has reduced its benchmark interest rate by 25 basis points to 7% during its December meeting, a move that aligns with market predictions and marks the interest rate's lowest point since May 2022. This decision represents a cautious approach to easing given the country's sluggish domestic economic activity and a tempering global growth forecast, especially concerning the United States and other major advanced economies. Inflation remains a concern, with core inflation proving resilient and headline inflation edging up to 3.8% in November. The central bank highlighted the strengthening of the peso and the rise in government bond yields across most maturities since their last meeting. Notable risks include global trade disputes, geopolitical tensions, and potential cost pressures that could maintain inflation levels above target. The board anticipates that inflation will align with the 3% target by the third quarter of 2026. Future rate changes will be contingent upon economic activity, exchange rate trends, and inflationary pressure. The decision was passed with a 4-1 majority vote.