Three of Banxico's board members leave door open to future rate cut
TLT•Three of the Bank of Mexico's five board members said future rate cuts could be considered if the inflation outlook improves. The board unanimously kept its benchmark rate at 6.50%.
1. Rate cut discussion
Minutes from Banxico's September meeting showed that three board members left open the possibility of future rate cuts if conditions allow. One said a one-off reduction could be considered in upcoming decisions if inflation trends and its determinants continue to support disinflation.
2. Inflation outlook
The board said risks to the inflation outlook remain tilted to the upside and unanimously cited geopolitical conflicts as an upside risk. Annual inflation accelerated for a second consecutive month in September, while annual core inflation eased for an eighth consecutive month.
3. Target and policy
The minutes said inflation is expected to converge to the 3% target in the fourth quarter of 2027. The board reiterated that Mexican monetary policy need not react mechanically to changes in the U.S. federal funds rate, given differing macroeconomic conditions.
