Mexico’s central bank signaled upside inflation risks persist despite a 25 basis point rate cut to 6.50% in May.
Banco de Mexico’s latest meeting minutes revealed the board’s concerns over inflation risks tied to the Middle East conflict, despite a 25 basis point rate cut to 6.50% on May 7. The decision marked the end of an easing cycle that began earlier this year, with a 3-2 vote split favoring the reduction.
All board members agreed inflation risks remain tilted to the upside, though they noted the direct impact on Mexico has been limited. The minutes also highlighted an unexpected contraction in economic activity during the first quarter, driven by declines across major sectors.
Deputy Governors Galia Borja and Jonathan Heath dissented, advocating for a hold to assess inflationary pressures more accurately. The board’s cautious stance reflects narrow room for further cuts amid elevated external rates.