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%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Times
41 minutes ago
- Times
Gravity9
Rank 69Annual sales growth over three years 75.69%Digital transformation consultancy From supporting a defence organisation to measure public opinion on Nato operations to helping a retailer to track its beauty concierge consultations and sales, Gravity9 helps diverse organisations to modernise their IT systems. Where necessary, it provides them with its own bespoke software. Noel Ady, 48, founded the company in 2017 and was joined by Andy Ross, also 48, two years later. Turnover reached £10.7 million last year when Gravity9 opened an office in Canada, its tenth overseas site. Explore the Sunday Times 100 — interviews, company profiles and more
Reuters
an hour ago
- Reuters
Colombia central bank expected to hold rate amid fiscal uncertainty
BOGOTA, June 27 (Reuters) - Colombia's central bank board is expected to hold the benchmark interest rate at 9.25% on Friday, on the back of mounting fiscal uncertainty and despite recent lower inflation. A majority of analysts in a Reuters survey last week predicted the hold, while a minority predicted a 25 basis point cut to 9%. The government's recent suspension of the so-called fiscal rule, which imposes policy constraints to protect public coffers, and an increase in its deficit target have set off alarm bells in a market already wary of President Gustavo Petro's economic policies. The government now has a deficit target for 2025 of 7.1% of gross domestic product, an increase from the previous estimate of 5.1% of GDP. The finance ministry has significantly increased its 2025 inflation estimate to 4.5%, nearly in line with the central bank technical team's prediction of 4.4%. Latin America's fourth-largest economy is facing lower tax revenue, high debt and difficulty reducing spending. "We are expecting stability," said Camilo Perez, director of economic investigation and market analysis at Banco de Bogota, though he said chances of a rate cut had increased in recent days on reduced recent inflation and an increase in value for local bonds and the peso. "The fiscal situation has notably deteriorated." Inflation, though still well above the central bank's long-term target of 3%, was down more than expected in the 12 months to May, to 5.05%. The bank board surprised the market in April with a 25 basis point cut, after a pause in a cutting cycle began in December 2023. Despite the predicted hold in the rate, 15 analysts who participated in additional Reuters questions in last week's survey all foresee a rate cut in the coming months, with 11 predicting a cut in July and the remaining four in September.
Rhyl Journal
2 hours ago
- Rhyl Journal
New plan could power Wales to top of offshore wind industry
The action plan, developed by a dedicated task group, aims to unlock long-term economic and environmental benefits by building on Wales' growing pipeline of more than 15GW of offshore wind projects in surrounding waters. The sector could deliver up to £4.8 billion for Welsh businesses and create more than 3,000 jobs. Rebecca Evans, Cabinet Secretary for Economy, Energy and Planning, said: "Last week, we welcomed the announcement that offshore wind in the Celtic Sea was moving from planning into development and delivery. "With two successful bidders announced to develop three gigawatts of clean energy, and a clear commitment from the Crown Estate to deliver the full 4.5GW, we see the start of billions of pounds of investment and thousands of jobs. "This truly is a once in a generation opportunity for our ports and will be a catalyst for economic regeneration in our coastal communities." The group recommendations include establishing a stakeholder forum by autumn 2025 to improve coordination between developers, government, and other key partners. Other proposals focus on streamlining planning and consent processes to speed up project delivery, supporting Welsh businesses to join the offshore wind supply chain, and addressing sector-specific skills gaps. Ajai Ahluwalia, head of supply chain at RenewableUK, said: "We are pleased to see clear, practical actions that respond directly to industry calls for greater certainty, stronger collaboration, and urgent delivery. "Offshore wind is one of the UK's greatest industrial opportunities — with the potential to transform Wales' heartland sectors, like steel and advanced manufacturing. "Over the next decade alone, £32 billion in economic value is at stake, including a £4.8 billion opportunity for Welsh businesses and 3,370 well-paid jobs. "To unlock that value, we must now move swiftly from planning to implementation — and industry stands ready to work with government to make it happen." The plan also emphasises the importance of skills development, calling for coordinated educational initiatives to prepare the workforce for emerging roles in wind turbine technology and high-voltage engineering. It highlights the need to integrate the Welsh steel and concrete industries into offshore wind supply chains, especially for floating wind foundations. Wales has led the way in offshore wind, hosting the UK's first fixed offshore wind projects in North Wales.
