Mexico Central Bank on Thursday ended a prolonged streak of monetary easing, leaving its benchmark interest rate unchanged at 7.0 percent, citing upside risks to inflation.
After 12 consecutive rate cuts, the bank’s policy-setting governing board announced a pause “consistent with the assessment of the current inflation outlook.”
It pointed in a statement to “an environment of persistent trade tension” putting pressure on inflation forecasts.
By the first half of January, Mexico’s year-on-year inflation accelerated to 3.77 percent — above the target of 3.0 percent.
Latin America’s second-largest economy had its worst performance in 2025 since the Covid-19 pandemic, growing 0.7 percent year-on-year as trade tensions with the United States took a toll.
The weak performance coincided with US President Donald Trump’s return to the White House, where he led a protectionist push by imposing tariffs on exports from numerous countries.
Mexico, which sends more than 80 percent of its exports to its northern neighbor, is particularly vulnerable to Trump’s trade policies generating uncertainty in the business sector.
AFP
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