Banxico lowers interest rate to 8.50%; inflation picks up

The Bank of Mexico (Banxico) cut its benchmark interest rate for the third consecutive time by 50 basis points, bringing it to 8.50% , a level not seen since August 2022.

In this way, the Central Bank complied with the consensus of analysts with a decision that was taken unanimously : the cut from 9% to 8.50%.

In Citi's most recent expectations survey, of the 34 respondents surveyed, 33 anticipated a half-point decline and only one predicted a 25-basis-point decline.

The decision by the Mexican Central Bank's governing body comes amid a slight rebound in annual headline inflation , which rose to 3.93% in April from 3.80% in March.

With the presence of all its members, the Board of Governors of #BancodeMéxico unanimously decided to reduce the One-Day Interbank Interest Rate to 8.50%, effective May 16, 2025. See the statement at: https://t.co/5I8HUr8Svr pic.twitter.com/kQMEOXezi4

— Bank of Mexico (@Banxico) May 15, 2025

Thus, inflation remains within the upper range of variability, one point more or less than the specific inflation target of 3%.

The announcement comes after the U.S. Federal Reserve (Fed) kept its interest rates unchanged last week, remaining within a range of 4.25% to 4.5%.

Meanwhile, in today's session, the exchange rate reached a high of 19.52 pesos per dollar at wholesale prices , after Banxico announced an interest rate cut.

Meanwhile, the retail dollar was at 19.98 pesos at Banamex branch windows, 0.6% or 12 cents higher than Wednesday's closing price.

It should be noted that although the rate cut was in line with market expectations, the forward-looking guidance indicates that cuts could continue and adjustments of a similar magnitude will be considered, according to Gabriela Siller, director of Economic and Financial Analysis at Grupo Base.

The Bank of Mexico cut its interest rate by 50 basis points, bringing it to 8.5%.

They raised their inflation expectations through the third quarter, but maintained an average inflation rate of 3.3% for the fourth quarter of 2025.