Mexico central bank governor eyes rate cuts, but not before 2024

MEXICO CITY (Reuters) – Mexico’s central bank governor said in a newspaper interview published on Monday that easing inflationary pressure meant the Bank of Mexico could start looking at gradually cutting its key interest rate, but that it was unlikely to happen this year.

Governor Victoria Rodriguez told newspaper El Financiero the bank would begin lowering rates once macroeconomic conditions allowed, noting: “We do not see that for the rest of this year.”

She was speaking after Banxico, as the monetary authority is known, last week held its benchmark interest rate at 11.25%, and forecast it would likely stay at the current level for “some time,” language that was more dovish than in previous guidance.

“The improvement in the inflationary outlook that we’re anticipating could allow us to begin discussing in future meetings the possibility of adjusting our reference rate downwards,” Rodriguez told the newspaper.

However, she stressed that any rate cuts by the bank would be “gradual” and that “we would not necessarily be looking at a cycle of continuous reductions. This is important.”

Mexico’s inflation eased for the ninth consecutive month in October to 4.26%, remaining at its lowest since early 2021.

The central bank targets an inflation rate of 3%, plus or minus one percentage point.