Banxico surprises with rate cut
Mexico’s central bank unexpectedly cut its benchmark rate to 6.75% in March despite inflationary pressures and a split vote — a clear divergence from major central banks. Meanwhile the UK, US and eurozone are holding policy tight and U.S. mortgage costs keep climbing, with average long‑term mortgage rates at about 6.38% and 30‑year fixed rates averaging 6.49%, squeezing households and housing demand. (mexiconewsdaily.com) (pilotonline.com) (bankrate.com)
Two members of Banco de México’s Governing Board—Galia Borja and Jonathan Heath—publicly argued at the March meeting for keeping the policy rate unchanged at 7%. (scotiabank.com)) The bank revised up its short‑term headline inflation projections to about 4.1%, 4.0% and 3.7% for the current and next two quarters and nudged core inflation forecasts to roughly 4.5%, 4.1% and 3.7%. (bbvaresearch.com)) Mexico’s national statistics agency reported headline inflation at 4.63% in the first half of March, with volatile food items and airfares driving the uptick—tomatoes jumped roughly 32% and airfares about 21.9% in the most recent data cited by market reports. (inegi.org.mx)) Currency and fixed‑income markets reacted: the peso moved toward about 17.9 per US dollar after the policy release and 10‑year Mexican government yields eased by roughly twenty basis points as local bond prices rallied. (tradingeconomics.com)) The decision followed a policy pause in February and comes after cumulative easing of roughly 425 basis points since early 2024, underscoring a shift in the bank’s focus toward supporting weaker domestic activity. (tradingeconomics.com)) Analysts say the bank preserved an easing bias while flagging that the cycle may be nearing its end; BBVA’s team projects one more 25‑bp move to 6.50% in May under its baseline, while Scotiabank’s note maintains a year‑end policy rate forecast around 6.50%. (bbvaresearch.com)) In the U.S., mortgage activity is already cooling: the Mortgage Bankers Association reported a 10.5% drop in applications for the week ending March 20, and trade press noted the 30‑year fixed rate has climbed into the mid‑6% range in recent surveys. (mba.org))
