Latest news with #Banxico
Reuters
2 days ago
- Business
- Reuters
Mexico's headline inflation seen returning to target in early July
MEXICO CITY, July 21 (Reuters) - Mexico's annual headline inflation likely slowed in the first half of July, though the core index remained under pressure, fueling expectations the central bank will moderate the pace of its interest rate cuts, a Reuters poll showed on Monday. The median forecast from 11 analysts was for a 3.64% annual headline inflation rate, down from 4.13% in the second half of June. The rate would place it within the central bank's target range of 3%, plus or minus one percentage point. (MXCPHI=ECI), opens new tab In contrast, forecasts for core inflation, considered a better measure of price trends because it strips out highly volatile items, indicated an acceleration to 4.30%, its highest level since the middle of last year. (MXCPIC=ECI), opens new tab Compared with the previous two-week period, consumer prices were seen rising 0.27%, while the core index is forecast to have increased 0.20%, according to the poll. (MXCPIF=ECI), opens new tab (MXCPIH=ECI), opens new tab Official data is scheduled for release on Thursday. Last month, Mexico's central bank cut its key interest rate by 50 basis points to 8.0%, although the five-member board's decision was not unanimous, as Deputy Governor Jonathan Heath voted to leave it unchanged. According to the meeting minutes, the four officials who supported the cut, the fourth consecutive cut of that size, said the bank could adopt a more gradual approach in future decisions. The central bank has lowered its benchmark rate by 325 basis points since the start of 2024 as part of an easing cycle after the rate reached a historic high of 11.25%. The next monetary policy decision is scheduled for August 7.
Reuters
10-07-2025
- Business
- Reuters
Mexico central bank board signals smaller rate cuts amid sticky inflation, weak economy
MEXICO CITY, July 10 (Reuters) - Most of the Bank of Mexico's governing board supports smaller cuts to the key interest rate, minutes from June's rate decision showed on Thursday, signaling a more cautious approach as Mexico grapples with stubborn inflation and sluggish growth. All four board members who backed June's 50-basis-point cut — the fourth in a row — signaled openness to a slower pace going forward. At least two said the June move should be the last of that size. Annual headline inflation accelerated in May beyond the central bank's target range of 3%, plus or minus one percentage point. While it eased in June to 4.32% after four months of increases, it remains above target. Crucially, the core inflation index, a key gauge that strips out volatile prices, accelerated to 4.24% – its highest level since April 2024. For the board's majority, "the central argument is that the weakness in the economy will create slack conditions that would allow inflation to converge toward the 3.0% target," analysts from Actinver said. One of those governors noted the bank's current monetary policy stance "is appropriate to address risks to inflation on both sides of the balance," adding that "going forward, a more gradual approach will be adopted during the rate-cutting cycle." Another suggested that "adjustments of lesser magnitude" could be considered given the inflation outlook. Banxico, as Mexico's central bank is known, has cut its benchmark interest rate by 325 basis points since early 2024 and by 200 points this year alone, as inflation has eased from its 2022 highs. Alberto Ramos, head of Latin America economic research at Goldman Sachs, said the balance of views on the board "remains dovish though more cautious," lowering the baseline for the board's next decision, in August, "to a cut of no more than 25 basis points." Deputy Governor Jonathan Heath, who cast the sole vote at the June meeting to hold the rate at its previous level of 8.50%, called for prudence while making his dissent argument. Heath said the expectation that inflation would naturally become low due to "greater slack conditions" is "unrealistic" because even though there is economic stagnation, current forecasts do not point to a deep enough recession that would sufficiently weaken aggregate demand. Analysts polled by the central bank in the second half of June forecast the Mexican economy growing just 0.2% this year. The central bank's latest forecast, in late May, estimated growth at 0.1% for 2025.
Reuters
26-06-2025
- Business
- Reuters
Bank of Mexico cuts key interest rate to near three-year low
June 26 (Reuters) - The Bank of Mexico lowered its benchmark rate by 50 basis points on Thursday as largely expected, although the decision by the central bank's five-member governing board was not unanimous. The move brings the rate to 8.0%, the lowest since August 2022. Deputy Governor Jonathan Heath was the sole dissenter, voting to hold the rate at its previous 8.5% level. In prior decisions, he agreed with rate cuts by the board. Markets had largely expected the 50 basis point cut, with 21 of 26 analysts polled by Reuters expecting the decision. The Mexican peso strengthened just over 0.2% against the dollar after the central bank's decision. Heath told Reuters earlier this month he supported a "more cautious, more prudent" approach until inflation resumed a clear downward trajectory. Annual headline inflation in Latin America's No. 2 economy has ticked up in recent months and jumped above the central bank's target range in May. It cooled slightly in the first half of June from the second half of May, hitting 4.51%, but still outside the central bank's target range of 3% plus or minus a percentage point. In its statement on Thursday, the central bank raised its forecast for year-end average headline inflation to 3.7% from its May forecast of 3.3%, although the bank held its estimate that inflation will converge to 3% in the third quarter of 2026. Banxico, as the Bank of Mexico is known, is balancing dual challenges: It is seeking to bring down inflation while also stimulating the economy amid weak economic growth and uncertainty tied to trade tensions and geopolitical developments. The board said in its statement that its decision was "made considering the behavior of the exchange rate, the weakness of economic activity, and the possible impact of changes in trade policies worldwide." "Looking ahead, the Board will assess further adjustments to the reference rate," the statement said. Notably, Thursday's decision did not include language from the most recent three monetary policy decisions about considering future cuts of "similar magnitudes." Private sector analysts polled by Reuters in May projected that Banxico will downsize its rate cuts for the rest of the year. Their median forecast was that the central bank will end 2025 with a benchmark rate of 7.5%.
Bloomberg
26-06-2025
- Business
- Bloomberg
Banxico Lowers Rate by Half a Point, Opens Door to Smaller Cuts
Mexico's central bank cut its benchmark interest rate by half a percentage point and opened the door to a smaller reduction ahead as policymakers worry Latin America's second-largest economy will continue to suffer headwinds after barely avoiding recession earlier this year. Banxico, as the bank is known, lowered its key lending rate to 8% on Thursday, as expected by 27 of 29 economists surveyed by Bloomberg. The two dissenters had forecast a 25-basis-point reduction. The split decision, with one board member voting for a pause, marks the bank's eighth consecutive move to lower borrowing costs in Mexico.
Business Recorder
23-06-2025
- Business
- Business Recorder
Brazil's real set for third weekly gain
BRASILIA: The Brazilian real lost ground on Friday but still looked poised to notch its third straight week of gains after a surprise interest rate hike earlier in the week, while tumbling crude prices dragged down the Mexican peso. The MSCI index of Latam currencies touched a record high earlier this week, but choppiness in crude and foreign exchange markets as a result of the Israel-Iran conflict, particularly for the dollar, has weighed on sentiment since. The Mexican peso slid to a two-week low against the dollar on Friday as Brent crude prices plunged nearly 3% after the White House postponed a decision on US involvement in the ongoing conflict. Oil is a key export for Mexico. Oil prices had soared almost 3% the day before after Israel struck nuclear targets in Iran and Iran, OPEC's third-largest producer, retaliated with missiles and drones. With both sides showing no signs of de-escalation, markets remained on edge. Mexico's IPC eked out a modest 0.4% gain, but still looked set for its roughest week in almost three months. Banxico faces a tough balancing act at next week's rate meeting, as recent data showed inflation racing past its 3% target. Beneath the surface, however, Mexico's economy only just dodged a technical recession in the first quarter and now grapples with sluggish domestic demand and jitters over US trade policy. Meanwhile, Brazil's real edged down to 5.52 per dollar as traders returned from a holiday, though it had briefly touched an eight-month high of 5.47.
