Banxico Cuts Interest Rate to 6.5%, as Expected

2026-05-07 23:28 By Joshua Ferrer 1 min. read

The Bank of Mexico lowered its benchmark interest rate by 25 basis points to 6.50% at its May 7, 2026 meeting, as expected, bringing it to its lowest level since April 2022 and likely marking the end of the easing cycle that began in March 2024.

The decision was split, with three board members backing the cut while two favored holding rates unchanged.

Banxico cited a contraction in Mexico’s economy during Q1 2026, saying weaker activity has created greater economic slack and reduced demand-driven inflation pressures.

Inflation eased between mid-March and April, with headline inflation slowing from 4.63% to 4.45% and core inflation falling from 4.46% to 4.26%.

Despite upward revisions to short-term inflation forecasts due to higher non-core prices, the central bank still expects inflation to converge to its 3% target in Q2 2027.

Banxico said maintaining the policy rate at the current level will likely be appropriate going forward amid ongoing geopolitical and trade-related uncertainty.



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Banxico Cuts Interest Rate to 6.5%, as Expected
The Bank of Mexico lowered its benchmark interest rate by 25 basis points to 6.50% at its May 7, 2026 meeting, as expected, bringing it to its lowest level since April 2022 and likely marking the end of the easing cycle that began in March 2024. The decision was split, with three board members backing the cut while two favored holding rates unchanged. Banxico cited a contraction in Mexico’s economy during Q1 2026, saying weaker activity has created greater economic slack and reduced demand-driven inflation pressures. Inflation eased between mid-March and April, with headline inflation slowing from 4.63% to 4.45% and core inflation falling from 4.46% to 4.26%. Despite upward revisions to short-term inflation forecasts due to higher non-core prices, the central bank still expects inflation to converge to its 3% target in Q2 2027. Banxico said maintaining the policy rate at the current level will likely be appropriate going forward amid ongoing geopolitical and trade-related uncertainty.
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