Mexico's Monetary Maneuver: Interest Rates Under Scrutiny

The Bank of Mexico, known as Banxico, is evaluating further reductions in its interest rate, as noted in the minutes from a recent meeting released on Thursday. The central bank recently lowered its benchmark rate to 7.5%, marking the lowest level since May 2022.

This decision is influenced by various factors, including exchange rate fluctuations, subdued economic activity, and potential global trade policy changes. Deputy Governor Jonathan Heath was the only board member to oppose the rate cut, arguing against it due to inflationary risks from Mexico's proposed tariffs on Chinese imports.

Heath emphasized the need for caution, noting that core inflation accelerated to 4.28% in September according to official government data, while headline inflation also rose to 3.76% from 3.57% in August, remaining within Banxico's target range.

(With inputs from agencies.)