Mexico's Monetary Strategy: Interest Rates Fall Amid Trade Uncertainty
The Bank of Mexico lowered its interest rate to 8.50% amid inflation control and trade uncertainties. The decision follows a trend to support economic activity amidst trade tensions with the U.S. Analysts express concerns that U.S. policies may impact Mexico's growth, projecting a modest 0.2% GDP increase.
The Bank of Mexico reduced its benchmark interest rate by 50 basis points, marking the third consecutive cut, as inflation remains manageable despite ongoing trade uncertainties. This decision, anticipated by experts, sets the rate at its lowest since August 2022.
Banxico signaled openness to further rate reductions following encouraging inflation data, which pegged April's annual inflation at 3.93%. However, trade tensions, particularly with the United States, pose potential risks to stability.
Despite a slight GDP growth of 0.2% in early 2025, concerns linger about the impact of U.S. policies under President Trump. The central bank underscores the significant risks these trade dynamics present to Mexico's economic growth outlook.
(With inputs from agencies.)
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