Another Interest Rate Cut by the Bank of Mexico
December 18, 2025
A cycle of a thirteen interest rate cuts by the Bank of Mexico began a year and a half ago from a peak of 11.25%, with five initial reductions of 25 basis points, then four larger 50-basis point moves and after than a reversion to four more cuts of 25 bps. The bank’s medium-term inflation target is 3.0%, and inflation peaked at 8.7% in August-September of 2022, and at no point since easing began did it fall as low as 3.0%. The last dozen rate cuts have occurred without interruption at scheduled policy reviews including the final one of 2025 held today. With CPI inflation rising to 3.8% last month, today’s 4-1 decision to lop the interest rate by 25 basis points drew one dissent, wishing to leave the policy rate at 7;25% rather than cut such to 7.0%, its lowest level since June 2022. As at the Board’s November review, inflation is projected to decelerate all the way to 3.0% by the third quarter of 2026. Today’s decision was influenced by the recent weakness of Mexican GDP growth, reflecting the impact of U.S. tariffs.
Copyright 2025, Larry Greenberg. All rights reserved.
Tags: Bank of Mexico
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