Banxico Eyes Bigger Rate Cuts Amid Inflation Ease

The Bank of Mexico (Banxico) is considering larger cuts to its benchmark interest rate in future meetings due to easing inflation, as indicated by minutes from its December policy meeting. Banxico's board unanimously reduced the rate by 25 basis points to 10.00%, highlighting progress in disinflation.

The Bank of Mexico, known as Banxico, might increase the size of its interest rate cuts in upcoming meetings, as inflation continues to decline in Mexico, Latin America's second-largest economy. According to the minutes from the bank's December monetary policy meeting, bigger future rate cuts were discussed.

Last month, Banxico's governing board unanimously decided to reduce its benchmark interest rate by 25 basis points, bringing it to 10.00%. The bank has embarked on a rate-cutting cycle since March 2024, gradually decreasing it from a record high.

Mexico observed better-than-expected inflation figures in December, with a drop to 4.21%, according to official data. With a target inflation rate of 3%, Banxico members have expressed support for considering larger rate reductions, given the recent disinflation progress.

(With inputs from agencies.)