As the market expected, the Bank of Mexico (Banxico) announced this Thursday a final interest rate cut of 25 basis points for the year, bringing it to 7% and sending signals that confirm the market's expectation of greater caution in 2026. In its Thursday statement, the central bank noted that for this decision, it considered the behavior of the exchange rate, the weakness shown by economic activity, and the possible impacts from changes in global trade policies. It highlights that in this communication, the Governing Board stated that it 'will evaluate the moment to make additional adjustments to the reference rate.' Another signal to be considered is that Banxico revised its inflation projections upwards for the end of the year and the beginning of the next year. According to this projection, general inflation will be at 3.7% on an annual basis at the end of 2025, compared to the 3.5% estimated the previous month; a figure that is repeated for the first quarter of next year, and for the second quarter, inflation is estimated at 3.3% and not the 3.2% expected before. The adjustment comes after an inflationary rebound in November, which already reached the 4% annual limit. This time was no exception, as the bank signaled the beginning of a monetary pause. On other occasions, it has also pointed out that there is a risk of damaging the central bank's credibility among specialists and the market. The board led by Victoria Rodríguez said that the effects of all determinants of inflation will be taken into account. And it added: 'The actions that are implemented will be such that the reference rate is consistent at all times with the trajectory required to promote the orderly and sustained convergence of general inflation to the 3% target within the envisaged timeframe.' Tension grows in the Ministry of Finance against Banxico: 'Now it turns out that Victoria was a technocrat.' Currently, none of the consensus forecasts among specialists project that inflation will next year achieve the central bank's target. Analysts from Actinver and Franklin Templeton point out that it opens the door for a pause in rate cuts, as already discounted in the financial markets. Under this pressure, Deputy Governor Jonathan Heath has already opposed cuts in three meetings.
