Banxico Cuts Interest Rate to 7.5%, as Expected

The Bank of Mexico cut its benchmark interest rate by 25 bps to 7.5% in its September meeting, in line with market expectations, bringing it to its lowest level since May 2022, and indicated it would consider further easing at future meetings. The decision came amid ongoing concerns about global trade tensions and sluggish economic growth in the country. In a statement on Thursday, the bank said it took into account "weak economic growth" and fluctuating global trade policies in its decision to lower borrowing costs. Wednesday’s data showed annual core inflation hit 4.26% in the first half of September. Banxico targets inflation at 3%, plus or minus a percentage point. Headline inflation also accelerated in the first half of September, rising to 3.74% from 3.49% in the first half of August. In updated inflation forecasts released on Thursday, Banxico raised its estimate for year-end annual core inflation to 4.0% in the fourth quarter, up from its previous estimate of 3.7%.