Bank of Mexico Cuts Benchmark Interest Rate in Split Decision

By Anthony Harrup

MEXICO CITY--The Bank of Mexico lowered its benchmark interest rate in a split decision, saying it was a "one-time adjustment" and it expects to hold the rate steady for a prolonged period.

The five-member board of governors voted 3-2 to reduce the overnight interest-rate target by a quarter of a percentage point, to 6.25%, following three consecutive meetings on hold. Deputy governors Galia Borja and Jonathan Heath voted to leave the rate at 6.5%.

The central bank had been widely expected to leave the rate unchanged. Of 36 respondents in a survey by Citi Research this week, six predicted a rate cut.

The Bank of Mexico called the rate cut a one-off move.

The central bank said it "considers that maintaining the reference rate at the attained level for an extended period will support the convergence of inflation to its target and will be adequate to face the challenges posed by the external macroeconomic environment."

The bank said the disinflation process is continuing and it still expects inflation to meet its 3% target in the fourth quarter of 2027.

Inflation accelerated to 3.62% in the first half of October from 3.42% in mid-September. Core inflation, which excludes fresh food and energy prices, was little changed at 3.78% in mid-October.

Economic activity also picked up after a small contraction at the start of the year, with gross domestic product expanding 1.4% seasonally adjusted in the second quarter from the first quarter, and 0.9% in the third quarter from the second.

Growth risks remain biased to the downside, and with continued slack conditions in the economy no demand-side inflation pressures are seen, while pass-through to prices from a weaker Mexican peso is expected to be limited, the Bank of Mexico said.

Write to Anthony Harrup at anthony.harrup@wsj.com

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November 05, 2026 14:59 ET (19:59 GMT)