Mexico’s central bank to cut benchmark rate by 25 basis points to 7.50% on September 25: Reuters poll

By Gabriel Burin

BUENOS AIRES (Reuters) – Mexico’s central bank is set to again lower its benchmark interest rate by a quarter of a percentage point on September 25, taking it to 7.50%, a Reuters poll showed.

That would be the eleventh moderate cut since the bank, known as Banxico, began a steady easing cycle to deal with weak economic conditions at the start of 2024.

Policymakers are expected to remain slightly more concerned by a slow domestic economy than by consumer price trends, in line with their outlook following last month’s 25 basis-point move.

All 24 economists polled from September 15-18 forecast Banxico’s five-member governing board would cut the key rate by a quarter percentage point to 7.50% from 7.75% at its September 25 meeting.

“Mexico’s economy has decelerated, with growth stalling in Q2. Meanwhile, inflation has moderated, aligning with Banxico’s 3 plus/minus 1% target,” said Luciano Campos, senior economist at Numera Analytics.

“Despite notable rate reductions over the past year, elevated interest rates persist, making a 25 basis-point cut from 7.75% to 7.50% the probable outcome at next week’s meeting,” he added.

Recent data showing lower than expected economic growth in the second quarter and relatively contained inflation in August were consistent with a continued gradual easing stance spelt out in the bank’s minutes.

The U.S. Federal Reserve’s rate cut earlier this week was seen as another factor supporting a new reduction in Mexico’s cost of borrowing.

“Banxico is likely to continue cutting rates well below market expectations as long as the Fed cuts and the U.S. dollar remains weak,” BofAML analysts wrote in a report after the Fed’s last move.

Of a total 19 responses to an extra question on when the bank’s next adjustment would be after September’s move, a majority of 16 said they saw another 25 basis-point decrease in November. Banxico does not meet in October.

The remaining three mentioned other months. Of 19 estimates for the size of the possible cut, 18 were for a quarter percentage point, with just one looking at a 50 basis-point move.

Quarterly medians in the survey showed Mexico’s rate falling to 7.00% by the close of this year, then dropping 25 basis points in the first quarter of 2026, and by another quarter percentage point in April-June of next year.

In August, consensus views pointed at a higher end-2025 rate of 7.50%, with the cost of borrowing decreasing to 7.00% in the first half of 2026.

(Other stories from the Reuters global economic poll)

(Reporting and polling by Gabriel Burin in Buenos Aires; Editing by Jan Harvey)