The Bank of Mexico (Banxico) began 2025 with a 50 basis point cut to the interest rate, in line with market expectations. The Banxico Board of Governors, completed with the appointment of Gabriel Cuadra as deputy governor, decided to keep the interest rate at 9.50 percent starting Friday, February 7. According to the monetary program for 2025, Banxico had anticipated 50 basis point cuts in the early meetings of the year due to advancements in the fight against inflation in Mexico.
In the voting of the Bank of Mexico Board of Governors, there were discrepancies regarding the 50 basis point cut. Governor Victoria Rodríguez Ceja, along with deputy governors Galia Borja, Gabriel Cuadra, and Omar Mejía, voted in favor of the cut, while deputy governor Jonathan Heath proposed a reduction of 25 basis points. Banxico reaffirmed its commitment to the primary objective of keeping inflation low and stable.
In an interview with El Financiero, Governor Victoria Rodríguez Ceja mentioned that tariffs imposed by Donald Trump could have various effects on Mexican inflation, with economic weakness potentially reducing price pressures and greater depreciation of the exchange rate representing an upside risk for inflation. Banxico acknowledged in a statement that Trump's tariffs create obstacles for the global economy, adding trade risks and inflationary pressures.
Regarding the agreed pause between Trump and President Claudia Sheinbaum on tariffs to Mexico, Economy Secretary Marcelo Ebrard mentioned that there are no guarantees that this pause will be maintained long term. Banxico projects that inflation will close the year at 3.3 percent and adjusted its inflation outlook for the first quarter of 2025, estimating that the price level will be at 3.7 percent, 10 basis points lower than the previous forecast.
