MEXICO CITY (Reuters) – The Bank of Mexico could increase the size of cuts to its benchmark interest rate in future meetings as inflation eases in Latin America’s No. 2 economy, minutes from the bank’s December monetary policy meeting showed on Thursday.
Banxico, as the Mexican central bank is known, lowered its benchmark interest rate by 25 basis points to 10.00% in a unanimous decision by its five-member governing board last month.
“In view of the progress on disinflation, larger downward adjustments could be considered in some meetings, albeit maintaining a restrictive stance,” the minutes said.
A breakdown of each of the bank’s five governors’ perspectives showed multiple members supporting the discussion of larger rate cuts.
Banxico began a rate-cutting cycle in March 2024 amid easing inflation, ultimately delivering five 25-basis-point cuts to bring its benchmark rate down from the record 11.25% that it reached in 2023.
At the December meeting, one of the five members pointed to “the undeniable progress in disinflation” as supporting their view that “it is necessary to increase the magnitude of rate cuts in some of the upcoming monetary policy decisions.”
Another member noted “the importance of communicating that adjustments of larger magnitude could be implemented at the next policy meetings.”
Mexico’s annual headline inflation rate fell more than expected in December, reaching 4.21%, official data published earlier on Thursday showed.
Banxico targets inflation at 3%, plus or minus one percentage point.