Banxico cuts benchmark interest rate to 6.25%, Digi Mart USA News (Mexico): The Bank of Mexico (Banxico) reduced its benchmark interest rate by 25 basis points, from 6.50% to 6.25%, effective Thursday, November 5, 2026.
The decision comes as the central bank’s monetary policy shifts relative to the interest rate differential with the United States, which itself is often adjusted by the U.S. central bank.
The Governing Board made the decision by majority vote on Wednesday, November 4, concluding that the disinflation process continues and that the Mexican economy maintains slack conditions without demand pressures. Three board members voted in favor of the cut, while Galia Borja Gómez and Jonathan Heath voted to keep the rate at 6.50%.
In announcing its monetary policy, Banxico said Mexican economic activity continued to expand during the third quarter of 2026. The bank identified several main factors that could pressure inflation, although it expects slack conditions to persist over the forecast horizon and warned that downside risks to growth remain.
The Governing Board said there are currently no demand pressures in the economy and that the degree of monetary restriction still has effects. It also estimated that, under current economic conditions, the pass-through of exchange rate movements to consumer prices would be limited.
For these reasons, board members considered a 25-basis-point adjustment viable.
Banxico reported that headline inflation rose from 3.42% to 3.62% between the first half of September and the first half of October 2026. The increase resulted from higher non-core inflation, while core inflation edged down slightly, from 3.79% to 3.78%.
Inflation expectations for the end of 2026 declined, while longer-term expectations remained stable but above the central bank’s target. The bank raised its headline inflation forecasts for the fourth quarter of 2026, mainly due to non-core inflation levels higher than anticipated.
Despite these adjustments, Banxico maintains its expectation that headline inflation will converge to its target during the fourth quarter of 2027.
