The Central Institute would adjust its monetary stance but would remain restrictive throughout the year. They forecast that general inflation would reach 3.0 percent in the third quarter of 2026 and the core inflation would reach that level in the second quarter of the same year.
The Bank of Mexico could reduce the reference rate by a magnitude greater than the adjustments of 25 basis points seen in 2024, if the disinflationary process continues significantly. The next monetary policy decision is expected to be announced on February 9, considering the restrictive stance, the impact of global shocks, and the economic weakness in prices.
The 2025 Monetary Program of the central bank mentions that the policies of the new U.S. administration could affect the Mexican economy. Victoria Rodríguez Ceja, governor of the Bank of Mexico, warns about potential adverse effects on trade relations with the United States and inflation. She highlights the importance of solid macroeconomic fundamentals and responsible monetary policy.
Regarding international reserves, Mexico has a record level of 229 billion 505 million dollars by mid-January, which provides confidence in the country's ability to face complex external economic and financial conditions. The governor mentions that they will seek to bring inflation to the 3.0 percent target and that, if necessary, they can complement the reserves with resources from the IMF.
A cut of 50 basis points to the reference rate is expected, bringing it to 9.50 percent, marking the first reduction of this magnitude in the current cycle. The Bank considers that the current challenges require reference rate levels lower than those during the inflationary stage of the pandemic and the conflict in Ukraine, but should remain higher than the levels prior to those events. It is also clarified that cutting to a greater extent will not necessarily be a rule for the rest of the year.
