Bank of Mexico Resumes Interest Rate-Cutting Cycle – Currency Thoughts

Bank of Mexico Resumes Interest Rate-Cutting Cycle

March 26, 2026

After holding it overnight interbank interest rate at 11.25% for the twelve months ending in March 2024, Bank of Mexico policymakers cut such by 125 basis points during the balance of 2024 and by a further 300 bps last year, reaching 7.0% after their final review in December. In February at their first meeting of 2026, the rate was held steady, and that’s what analysts were expecting at this week’s second scheduled review because Mexican CPI inflation has moved upward from 3.69% in January to 4.02% in February and even somewhat higher during the first half of March. However, by a narrow 3-2 vote, the central bank Governing Board instead cut the rate to 6.75%, prioritizing the recent weakness of Mexican growth and in light of the steadiness of core underlying inflation. Officials “deemed appropriate on this occasion to continue the rate-cutting cycle, consistent with the assessment of the current inflationary outlook. It took into account the observed levels of the exchange rate, the weakness of economic activity, and the level of monetary restriction implemented. It also deemed that the monetary policy stance attained is adequate to face the challenges posed by an extension and escalation of the Middle Eastern conflict and its outcome.” The central bank targets medium-term inflation at 3.0%.

Copyright 2025, Larry Greenberg. All rights reserved.

Tags: Bank of Mexico

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on Thursday, March 26th, 2026 at 7:35 pm and is filed under Central Bank Watch.
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