Banxico: Cautious after a close call for cut – Rabobank

FXStreet Insights Team FXStreet

Rabobank’s RaboResearch Global Economics & Markets team reviews Banxico’s March 26 decision to cut the overnight policy rate by 25bp to 6.75%. The move was a close call, with two governors preferring to keep rates at 7.00%. The Bank acknowledges Middle East war risks and now projects inflation at or above 4.0% until Q3 2026, reaching its 3.0% target by Q2 2027.

Banxico cuts as inflation risks linger

"Banxico announced that it cut the overnight policy rate 25bp to 6.75% at the March 26 meeting."

"This was a close call with Governors Borja and Heath dissenting in favor of maintaining the overnight policy rate at 7.00%."

"The Bank was light-handed in its inclusion of the risks the ongoing war in the Middle East poses to the Mexican economy, but it highlighted that it did add “uncertainty” to its forecasts."

"The projections now see both headline and core inflation at or above 4.0% until Q3 2026, while previous projections suggested headline inflation at 3.8% by Q2 2026."

"The Bank still sees convergence to the 3.0% target by Q2 2027"

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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