Minutes of the June rate decision were released on Thursday, indicating a more cautious stance as Mexico struggles with slow growth and persistent inflation. The majority of the Bank of Mexico’s governing board prefers modest cuts to the benchmark interest rate.
The four board members who supported June’s 50-basis-point decrease for the fourth consecutive time indicated that they were amenable to a slower pace in the future. According to at least two, the June shift ought to be the final one of that magnitude.
The central bank’s goal range of 3%, plus or minus one percentage point, was exceeded by annual headline inflation in May. It is still above goal even if it decreased to 4.32% in June following four months of gains.
Notably, a crucial indicator that eliminates unpredictable prices, the core inflation index, surged to 4.24%, the highest level since April 2024.
For the majority of the board members, “the central argument is that the weakness in the economy will create slack conditions that would allow inflation to converge towards the 3.0% target,
One of those governors stated that “going forward, a more gradual approach will be adopted during the rate-cutting cycle,” indicating that the bank’s present monetary policy stance is suitable to handle inflation concerns on both sides of the balance.
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