Mexico central bank lowers benchmark interest rate to 8.00% from 8.25%

Eren Sengezer FXStreet

In a surprise decision today, Mexico's central bank, Banxico, announced that it lowered its benchmark interest rate by 25 basis points to 8% from 8.25%. With the initial reaction, the USD/MXN rose to a daily high of 19,7615.

The bank said that the decision was not unanimous. Below are some key takeaways from the policy statement, as reported by Reuters.

"One board member voted to keep rate at 8.25%."

"Balance of risks for growth is still tilted downwards in an environment of marked uncertainty."

"Upwards risks to inflation include that Mexico's peso comes under pressure from internal and external factors."

"Risks to inflation also include threat of US tariffs."

"Inflation expectations have remained relatively stable, though above 3%."

"It's important to deal with the deterioration in credit rating of Mexico government and of Pemex."

"If the economy requires an adjustment in the real exchange rate, the Bank of Mexico will help this to happen in an orderly manner, avoiding second round effects."

"Will continue to monitor the relative monetary policy stance between Mexico and the United States."

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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