Mexico central bank board member projects further, 'gradual' rate cuts

MEXICO CITY, Nov 12 (Reuters) - Mexican Central Bank Deputy Governor Omar Mejia expects the next phase of the monetary authority's rate cut cycle to continue gradually, he said in a podcast released by lender Banorte on Wednesday.

The central bank, known as Banxico, last week cut the benchmark interest rate by 25 basis points to 7.25%, its lowest since May 2022.

While that size cut was widely expected, the Banxico board struck a more cautious tone on its outlook going forward, as the economy shows weakness but core inflation remains sticky.

The monetary policy decision offered guidance only for its next meeting, a change from past meetings.

"I believe the monetary restriction from the past few years will continue contributing toward a lowering in inflation," Mejia said.

Stubborn core inflation, which strips out volatile products,

remains outside the bank's target range

of 3% plus or minus one percentage point.

"The next phase in this rate cut cycle will continue with a gradual approach, taking into account both the observed and expected behavior of inflationary factors," Mejia said.

Next year, Mexico should undergo a moderate economic recovery, backed by a recovery in manufacturing in the U.S. and a recovery in investment and consumption domestically, the board member added.

However, that recovery should not translate into internal price pressures, he said.

(Reporting by Ana Isabel Martinez and Kylie Madry; Editing by Alex Richardson)