The Bank of Mexico cut the target for the overnight interbank interest rate by 25 basis points to 6.75%, effective March 27, saying it would continue the rate-cutting cycle in line with the current inflation outlook while taking into account the exchange rate, weak economic activity and the degree of monetary restriction; after holding the rate at 7.00% on February 5, it lowered it in March. The Governing Board said future actions will depend on macroeconomic and financial conditions and will keep the reference rate consistent with an orderly and sustained convergence of headline inflation to the 3% target. Domestic conditions were mixed: headline inflation rose to 4.63% in the first fortnight of March from 3.77% in the first fortnight of January due to higher non-core prices, core inflation was broadly unchanged at 4.46%, inflation forecasts were revised up between the first and third quarter of 2026, and headline inflation is still expected to converge to target in the second quarter of 2027, while economic activity showed significant weakness at the start of 2026 and Mexico’s medium- and long-term government yields increased as the peso depreciated slightly. Globally, the central bank said activity should grow faster in the first quarter of 2026 than in the previous quarter, but the Middle Eastern conflict has raised market volatility and commodity prices and added uncertainty, while the Federal Reserve kept rates unchanged. The decision was taken by majority, and the Boar
Bank of Mexico2026-03-26
Bank of Mexico cuts target for the overnight interbank interest rate by 25 basis points to 6.75%
The Bank of Mexico cut the target for the overnight interbank interest rate by 25 basis points to 6.75%, effective March 27, and said it would continue the rate-cutting cycle in line with the inflation outlook while considering the exchange rate, weak economic activity and the degree of monetary restriction. The majority decision came as headline inflation rose to 4.63% in the first fortnight of March and forecasts were revised up for parts of 2026, though inflation is still expected to converge to the 3% target in the second quarter of 2027, with future moves dependent on macroeconomic and financial conditions.