Bank of Mexico May Consider Larger Rate Cuts, Says Bank Governor

• The Bank of Mexico's governing board may consider larger cuts to its benchmark interest rate going forward as inflation in Latin America's second-largest economy cools, bank governor Victoria Rodriguez told Reuters on Monday, September 30.
• Banxico, Mexico’s central bank, lowered its key rate by 25 basis points (bps) to 10.50% last Thursday, the second consecutive cut as price pressures ease. Banxico previously cut rates by 25 bps in March.
• Banxico will announce its next monetary policy decisions on November 14 and December 19. However, the latest rate cut approved by Banxico's five-member governing board was not unanimous. Deputy Governor Jonathan Heath voted to hold the rate at 10.75%.
• Mexico's annual headline inflation slowed to 4.66% in the first half of September, official data showed, its fourth consecutive fortnight of decline. Core inflation also moderated to 3.95%, its lowest level since early 2021.
• "The adjustment to the inflationary outlook indicates to us that it's appropriate to reduce the level of restrictive monetary policy, though we also recognize we continue to face challenges," said Rodriguez. "The inflation outlook has been improving significantly. Last week, Banxico revised its forecast for annual headline inflation in the fourth quarter slightly downward to 4.3%, from 4.4% previously, while also adjusting its expectations for core inflation to 3.8% from 3.9%.

(Source: Reuters)