The Bank of Mexico (Banxico) has reduced the interest rate by 25 basis points, bringing it to 6.50%, a level not seen since March 2022. This is the second consecutive cut of the year.
The Bank of Mexico (Banxico) has made another move. This Thursday, the governing board of the central institute decided to cut the interest rate by 25 basis points, leaving it at 6.50%, the lowest level since March 2022. This is the second consecutive downward adjustment in 2026, in line with what most analysts expected.
A cycle of cuts nearing its end
The governor of Banxico, Victoria Rodríguez Ceja, had already anticipated that the cycle of cuts might be nearing its end. On April 28, during her appearance before the Senate Finance Committee, she stated: “I believe we are close to concluding the cycle of cuts that we started in May 2024.” Her words have been confirmed by Thursday's decision, which leaves the door open for a possible pause in the coming months.
The cut occurs in a context of moderation of inflation, although still above the central bank's target. The National Institute of Statistics and Geography (Inegi) published the April data this morning: the National Consumer Price Index (INPC) stood at 4.45%, down from 4.59% in March. This is the third consecutive month that general inflation exceeds Banxico's upper variability range, set at 4%.
“I believe we are close to concluding the cycle of cuts that we started in May 2024,” said Victoria Rodríguez Ceja, governor of Banxico.
Core inflation and food pressures
The core component, which excludes the most volatile prices, moderated slightly, but the non-core component accelerated to 5.08%, driven by agricultural products, which rose by 7.98%. Among the products that exerted the most upward pressure are tomatoes, chillies, high-octane gasoline, and domestic LP gas. For consumers, this remains a burden, although the overall trend points to a gradual deceleration of prices.
Banxico's decision contrasts with that of the Federal Reserve (Fed) of the United States, which on April 29 kept rates unchanged in the 3.50% to 3.75% range for the third consecutive meeting. The Fed's statement was interpreted as more restrictive than in previous occasions, marking a divergence in the monetary policy of both countries.
What does this mean for businesses and consumers?
For businesses and households with loans linked to the reference rate, this cut represents a relief in debt costs. Mortgages and variable business loans become slightly cheaper, although the cumulative effect of the cuts since May 2024 is already significant. However, analysts warn that the room for new cuts is narrowing, and the central bank may pause in the coming months to assess the evolution of inflation and the impact of geopolitical tensions.
Banxico's next meeting is scheduled for the end of June. All signs point to the possibility of a final cut if inflation continues to moderate and the economy shows no signs of overheating, although the governor has already made it clear that the cycle is nearing its end. For investors, attention is now focused on medium-term inflation expectations and the evolution of the exchange rate, which could be affected by the divergence with the Fed.
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