Banxico Governor Hints at Further Rate Cuts After 7.75% Move

Mexico’s Central Bank (Banxico) may continue its cycle of interest rate cuts after lowering the benchmark rate by 25 basis points in August, Governor Victoria Rodríguez Ceja said.

Speaking at the presentation of the central bank’s quarterly inflation report, Rodríguez stated that future monetary policy decisions will depend on inflation trends, the economy’s cyclical position, and exchange rate conditions. The August cut brought the benchmark rate to 7.75%.

“This decision allows us to keep the option of additional cuts open, based on factors affecting inflation,” Rodríguez said.

Deputy Governors Galia Borja, Omar Mejía, and Gabriel Cuadra agreed that upcoming decisions will hinge on the evolution of macroeconomic conditions and inflation drivers.

Jonathan Heath, the board’s senior member—who voted against the August cut—warned that core inflation remains a concern due to its persistent trend. Core inflation excludes goods and services with volatile prices and is considered a key indicator of future price pressures.

Headline inflation stood at 3.49% in August, down from recent increases, mainly due to lower non-core inflation, which reflects supply shocks such as livestock price fluctuations. Core inflation, however, has remained above 4% for three consecutive months, peaking at 4.24% in May and reaching 4.21% in the first half of August, according to the National Institute of Statistics and Geography (INEGI).

Heath highlighted rising prices in food service categories—such as restaurants and small eateries—which have posted annual increases above 8%. Rodríguez acknowledged that persistent service inflation remains a risk factor, while Mejía noted that livestock price volatility since May likely caused short-term impacts on food supply.

Despite these pressures, Rodríguez said service inflation is gradually trending downward. INEGI data show annual service inflation fluctuating between 4.35% in March and 4.44% in July, with 4.43% recorded in mid-August.