Banxico Minutes Signal Cautious Easing Amid Global Uncertainty

2025-02-20 18:36 By Felipe Alarcon 1 min. read

Banxico, as the Mexican central bank is known, lowered its key rate by half a percentage point to 9.50% in a decision announced on February 6, as inflation cooled and after the economy contracted slightly late last year.

The minutes revealed that several board members now foresee a similar 50bps reduction at the March 27 meeting if disinflation continues, signaling a potential acceleration of the easing cycle.

However, the central bank remains cautious amid significant global uncertainties, notably potential U.S.

tariff threats and broader geopolitical risks that could either fuel inflation through currency depreciation or dampen growth due to increased economic slack.

While progress towards the 3% inflation target has been notable, members stressed the importance of a flexible policy framework, one that allows for swift adjustments in a "new stage" of monetary policy without jeopardizing financial stability, particularly given the current rate differential with the Federal Reserve.



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