Mexico’s central bank is widely expected to lower its key interest rate by 25 basis points at the September 25 policy meeting, according to Bank of America (NYSE:BAC). If implemented, this move would bring the overnight rate down to 7.50% from the current 7.75%.
Market expectations already reflect a quarter-point reduction, consistent with BofA’s forecast. Economist Carlos Capistran anticipates that the Central Bank of Mexico (BANXICO) will go ahead with the cut, even as core inflation remains relatively high but stable.
BofA notes that BANXICO is likely to frame the rate reduction as a response to broader economic weakness in the country. The move would continue the bank’s ongoing monetary easing cycle, striking a balance between supporting growth and monitoring inflation pressures.
While some members of BANXICO’s board have voiced resistance to further cuts, the majority is expected to favor easing. BofA adds that additional reductions could follow later in 2025 if certain conditions persist, such as headline inflation staying below 4%, continued sluggish economic activity, a strong peso, or further interest rate cuts by the U.S. Federal Reserve.
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