2025.08.0719:28:45UTC+00Banxico Lowers Interest Rate to 7.75%, as Expected

In its August meeting, the Bank of Mexico decided to reduce its benchmark interest rate by 25 basis points, bringing it down to 7.75%. This decision was influenced by a decline in annual inflation, which fell from 4.51% in mid-June to 3.51% in July. The domestic economy also demonstrated slightly accelerated growth in the second quarter compared to the first, although there remains some economic slack. The Board indicated that this rate cut is part of an ongoing series, considering the current level of monetary restriction and foreseeing that the disinflation trend will facilitate further rate reductions while maintaining a restrictive monetary stance. Despite these measures, the central bank remains vigilant of the elevated global uncertainty caused by trade tensions and geopolitical conflicts, which could potentially trigger inflation through the depreciation of the peso or exacerbate economic slowdown. Although the path towards achieving the 3% inflation target appears steady, with forecasts remaining constant and pointing towards convergence by the third quarter of 2026, the Board emphasized the necessity of a flexible policy framework.