Banxico’s Governor Rodriguez: Considering rate cut since September – El Financiero
The Bank of Mexico (Banxico) Governor Victoria Rodriguez Ceja said in an interview with El Financiero that the Mexican central bank has been considering rate cuts since September.
Last week, Banxico reduced interest rates by 25 basis points, unexpectedly, from 6.50% to 6.25% on a 3-2 vote split, with Deputy Governors Galia Borja and Jonathan Heath opting to hold rates, as inflation has continued to rise, though it remains within the 3% plus or minus 1% range.
Regarding the exchange rate, she added that there is still an appreciation, compared to the average of the USD/MXN exchange rate held in 2025, adding that “The importance of exchange rate behavior under our free-floating regime lies in its potential impact on inflation. And we know that the pass-through of exchange rate fluctuations to consumer prices in Mexico is small. This is even more noticeable in an environment of slack.”
She added that going forward, “maintaining the rate at its current level – 6.25% – for an extended period will support the convergence of inflation to the target and will be adequate to address external macroeconomic challenges.”
Banxico FAQs
The Bank of Mexico, also known as Banxico, is the country’s central bank. Its mission is to preserve the value of Mexico’s currency, the Mexican Peso (MXN), and to set the monetary policy. To this end, its main objective is to maintain low and stable inflation within target levels – at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%.
The main tool of the Banxico to guide monetary policy is by setting interest rates. When inflation is above target, the bank will attempt to tame it by raising rates, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN. The rate differential with the USD, or how the Banxico is expected to set interest rates compared with the US Federal Reserve (Fed), is a key factor.
Banxico meets eight times a year, and its monetary policy is greatly influenced by decisions of the US Federal Reserve (Fed). Therefore, the central bank’s decision-making committee usually gathers a week after the Fed. In doing so, Banxico reacts and sometimes anticipates monetary policy measures set by the Federal Reserve. For example, after the Covid-19 pandemic, before the Fed raised rates, Banxico did it first in an attempt to diminish the chances of a substantial depreciation of the Mexican Peso (MXN) and to prevent capital outflows that could destabilize the country.
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
