Mexico's Central Bank Signals Rate Cut Cycle Nearing End As Reduces Rate By 25bps, Says BBVA Research

06:10 AM EDT, 03/27/2026 (MT Newswires) -- Mexico's central bank (Banxico) cut the policy rate by 25bps to 6.75% as we expected on Thursday, acknowledging soft activity and downside risks tied to the Middle East conflict, said BBVA Research.

The decision came alongside a modest upward revision to its inflation forecasts, but Banxico doesn't appear overly concerned about the outlook, noted BBVA Research.

Banxico kept an easing bias but clearly indicated that the easing cycle is near its end, with only one additional 25bps reduced remaining to bring the policy rate to 6.50%, stated BBVA Research.

Forward guidance states that, depending on the evolution of conditions, "the Board will evaluate the appropriateness and timing for an additional reference rate cut."

The outcome of Thursday's meeting reinforced BBVA Research's long-held view that the easing cycle will end at 6.50%, with the timing of the final cut dependent on the duration of the Iran conflict.

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