Mexico: Central Bank cuts rates in May
Latest bank decision: At its meeting on 7 May, the Central Bank decided to cut the target for the overnight interbank interest rate by 25 basis points to 6.50%, taking total cuts since early 2024 to 475 basis points.
Weak economy and benign inflation forecast drive decision: The decision to cut was partly aimed at shoring up the economy, with the Bank highlighting in its statement that “economic slack is expected to be greater than previously anticipated.” In addition, the Bank expects headline and core inflation to converge to the center of the 2.0–4.0% target range over the coming year, providing the leeway to cut rates.
Rates to stay on hold: After substantial monetary easing over the last couple of years, our Consensus is for the Central Bank to not make any further interest rate cuts. This aligns with the Bank’s own forward guidance.