These larger cuts will not be necessary to continue by the end of the year. Banxico as the central bank is said to be 2025’s monetary program report. The bank said these meeting
“In the bank’s central scenario, even with the downward adjustments to be made, the monetary policy stance would remain in restrictive territory throughout the year,”.
Banxico also warned that the balance of risks to control inflation stays tilted to the upside. The reason is mainly due to the persistence of core inflation.
According to the report, Mexico’s headline inflation slowed down to 3.69% in early January just in the previous year. The December margin is down to 3.99% and improving the odds of a bigger interest rate cut at the central bank’s next polices meeting on February 6.
Banxico also cut its key rate by a quarter-point during the fourth straight meeting to 10% last month. The policymakers pointed out that
“in view of the progress on disinflation, larger downward adjustments could be considered in some meetings.”
The bank sees a moderate growth of 1.2% according to the Mexican economy for 2025. The downside risks and a great deal of uncertainty. The potential policies of President Donald Trump’s administration put the economic activity and inflation forecasts in doubt.
The bank said US-Mexico economic integration changes the trade and financial policies that can have repercussions for Mexico’s macroeconomic fundamentals.
Donald Trump threatened to impose a 25% tariff on Mexico if they don’t reduce border crossing of undocumented migrants and drug trafficking into the US, Mexican President Claudia Sheinbaum has said that has demonstrated the Mexican progress in both areas to Trump. She is also confident of having a good relationship with the country and becoming the country’s largest trade partner.
