Dec 18 (Reuters) – The Bank of Mexico lowered its benchmark interest rate by 25 basis points on Thursday, signaling confidence that inflation is still on track to return to target, even though near-term inflation risks have increased and economic growth is weak.
The reduction, which was widely expected by analysts, brings the rate to 7.00%, its lowest level since before May 2022.
The decision by the central bank’s five-member governing board was not unanimous, the bank said in a statement.
For the fifth consecutive rate decision, Deputy Governor Jonathan Heath voted to hold the rate at its previous level.
The bank’s inflation projections for both headline and core inflation were revised higher for the fourth quarter of 2025 and the upcoming two quarters, which the bank credited mostly to services inflation easing more slowly than expected.
Even so, Banxico, as the central bank is known, still projects headline inflation will return to the bank’s 3% target by the third quarter of 2026.
(Reporting by Brendan O’Boyle; Editing by Emily Green)
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