Mexico central bank surprises with 'one-time' rate cut
TLT•Mexico's central bank cut its key interest rate by 25 basis points to 6.25%, surprising markets; three board members voted for the cut and two opposed it. It raised its fourth-quarter 2026 inflation forecasts and maintained its expectation that inflation will reach 3.0% in the fourth quarter of 2027.
1. Surprise rate cut
Mexico's central bank cut its key interest rate by 25 basis points to 6.25% on Thursday, contrary to market expectations that it would remain unchanged. The five-member board split, with three voting to cut and two preferring to hold the rate at 6.50%.
2. Inflation outlook
The bank described the move as a “one-time adjustment” and said keeping the rate at its new level for an extended period would support inflation's convergence to its target and remain adequate to face external macroeconomic challenges. It raised its fourth-quarter 2026 headline inflation forecast to 3.7% from 3.5% and its core inflation forecast to 3.7% from 3.6%, while maintaining its expectation that inflation will reach its 3.0% target in the fourth quarter of 2027.
