Banxico highlighted that short-term inflationary risks derive from an unstable international situation for the economy, which motivated the current cut in the interest rate.
Mexico City, November 6 (However).- The Governing Board of the Bank of Mexico (Banxico) cut back this Thursday afternoon interest rate reference in 25 basis pointsto leave it in 7.25 percent. The measure is motivated by the “weakness” of economic activity and will come into force from November 7, 2025.
“In the third quarter of 2025, global economic activity would have expanded at a slower pace than the previous quarter. Given the current environment of trade tensions, the global economy and the United States economy continue to be expected to slow down this year and next with respect to 2024,” the institution said in a statement. statement.
According to the assessments of the management entity, the national economy faces a difficult outlook after the contraction registered in the third quarter of the year, in which general inflation in most advanced economies increased compared to the levels observed at the end of the second quarter.
Regarding the inflation outlook, Banxico detailed that between the first half of September and the first half of October, “general inflation decreased from 3.74 percent to 3.63 percent and underlying inflation showed a limited change from 4.26 percent to 4.24 percent. General inflation expectations for the end of 2025 decreased. Longer-term expectations remained relatively stable at levels above the target,” he noted.
With the presence of all its members, the Governing Board of the #BancodeMexico decided by majority to reduce the 1-day Interbank Interest Rate, to a level of 7.25% with effect from November 7, 2025. Consult the statement at: pic.twitter.com/9B35bdUsFn
— Bank of Mexico (@Banxico) November 6, 2025
The institution, directed by Victoria Rodríguez Ceja, warned that financial risks derive from a global situation in which “the escalation of trade tensions and the worsening of geopolitical conflicts stand out, with possible impacts on inflation, economic activity and the volatility of financial markets.”
“The Governing Board deemed it appropriate to continue with the cycle of reductions in the reference rate. This was consistent with the assessment of the current inflationary outlook. In particular, it considered the behavior of the exchange rate, the weakness that economic activity has shown and the possible impacts of changes in trade policies at a global level,” detailed the Bank of Mexico.
Given this situation, the Governing Board agreed that the most appropriate thing for monetary policy was to maintain the current cycle of reductions in the reference rate. In particular, “it considered the behavior of the exchange rate, the weakness that economic activity has shown and the possible impacts of changes in trade policies at a global level,” the directive noted.
The decision to cut the interest rate was not unanimous. Victoria Rodríguez Ceja, as well as deputy governors Galia Borja Gómez, José Gabriel Cuadra García and Omar Mejía Castelazo, voted in favor of implementing the measure.
General inflation forecasts had moderate changes. Those of the underlying showed some upward adjustment. General inflation continues to be expected to converge to the target in the third quarter of 2026. pic.twitter.com/zBwednKJwA
— Bank of Mexico (@Banxico) September 25, 2025
Meanwhile, Jonathan Heath voted against, as the economist estimated that he should not rush to aggressively lower interest rates until he was certain that inflation has a clear downward trend, which is why he suggested maintaining the objective for the overnight interest rate at a level of 7.50 percent.