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Mexico: 50bp Rate Cut To 8% (Consensus 8%) in Jun-25

• Banxico cut rates by 50 basis points to 8.00% as expected, but Deputy Governor Jonathan Heath's dissent signals growing concern about aggressive easing while inflation remains at 4.51%.
• The central bank raised year-end inflation forecasts to 3.7% from 3.3% while maintaining that convergence to the 3% target will occur by Q3 2026.
• Removal of language about future cuts of "similar magnitudes" suggests a shift towards more cautious easing amid trade policy uncertainty and persistent inflation pressures.

Mexico: 50bp Rate Cut To 8.5% (Consensus 8.5%) in May-25

• As expected, Banco de México cut the overnight interest rate by 50 basis points to 8.50%, continuing its cautious easing cycle amid ongoing disinflation and subdued economic growth.
• Headline and core inflation stood at 3.93% in April, but short-term forecasts were revised upward due to stronger goods price pressures, with the inflation path still projected to reach the target by Q3 2026.
• Despite improved inflation dynamics, upside risks persist. Nonetheless, the Bank signalled further cuts of similar magnitude, while seeking to maintain a restrictive stance that safeguards convergence to the 3% target.

Mexico: 50bp Rate Cut To 9% (Consensus 9%) in Mar-25

• Banco de México cut the overnight interbank rate by 50 basis points to 9.00%, in line with expectations, citing sustained disinflation and inflation levels consistent with pre-pandemic norms.
• Inflation is forecast to reach the 3% target by Q3 2026, with risks still skewed to the upside due to global trade tensions, geopolitical instability, and persistent core inflation.
• The central bank indicated further 50bp cuts remain plausible, but policy will remain restrictive and data-dependent to ensure inflation converges to the target sustainably and orderly.

Oil Update: Pipe Dreams

• With so many conflicting signals emerging from the US Administration, it is not surprising that both investors and extractors are increasingly cautious about politicians’ aspirations for the hydrocarbons market in both the US and Canada. This may be some small consolation for Opec.

By Alastair Newton