Split Vote in Rate Cut at Mexico's Central Bank Signals The End of "Aggressive" Rate Cuts, Says Scotiabank

06:35 AM EDT, 06/27/2025 (MT Newswires) -- The Governing Board of Mexico's central bank (Banxico) decided to cut the policy interest rate in a divided decision by 50 basis points to 8.00% late Thursday, in line with consensus expectations, said Scotiabank.

Inflation forecasts for both headline and core inflation were revised upward in the short term due to the recent rebound above 4.0%, although convergence to the 3.0% target is still expected by Q3 2026.

The policy statement highlighted the recent increase in goods prices and a slow deceleration in services inflation, while maintaining an upward-skewed balance of inflation risks, noted the bank.

Scotiabank considers the tone of the statement as less dovish, as it removed forward guidance for another 50 bps cut. As a consequence, the next meeting could again result in a split vote, possibly favoring a 25 bps cut.

The bank's year-end 2025 rate forecast remains at 7.50%, subject to inflation dynamics and the interest rate spread between Mexico and the United States.

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