In testimony to the Senate, the Central Bank of Mexico reviewed the disinflation process and its shift into a “new stage” of returning inflation to the 3% target while easing monetary restriction. With headline inflation at 3.80% and core at 3.64% in March, the policy rate has been cut from 11.25% to 9.00% through five 25 basis point reductions in 2024 and two 50 basis point cuts in February and March 2025, and the bank indicated it could continue calibrating policy with similarly sized adjustments if inflation evolves as expected. Banxico projects headline inflation converging to 3% in the third quarter of 2026 and core inflation reaching 3% one quarter earlier, against a backdrop of a slowing economy and heightened uncertainty from trade tensions and US policy changes. On financial stability, the bank judged the system adequately capitalised and liquid, citing the commercial banking sector’s capital adequacy ratio (ICAP) near 20% versus a 10.5% minimum and liquidity coverage and net stable funding ratios around 180% and 130% versus 100% minima; semiannual stress tests do not point to system-wide solvency risks over a three-year horizon. The appearance also highlighted measures to promote competition and consumer transparency under the Law for Transparency and Ordering of Financial Services, including development of a platform that would send a standardised credit application to participating institutions and return personalised, binding offers, more than 9.6 million successful payroll-portability requests by the first quarter of 2025, and the Banxico Contigo portal launched in December 2024; banks and regulated SOFOMs have issued a standardised Universal Credit Card Account Statement since October, while a standard fee-category catalogue must be adopted by 15 January 2026. Payments data showed SPEI processing over five billion instant transfers in 2024 worth around MXN 600 trillion and card payments nearing ten billion transactions worth about MXN 6 trillion, and Banxico reported work with the National Banking and Securities Commission on post-trade reforms including moving equity-market settlement to one day and expanding the securities central counterparty’s settlement services for federal government bond trades.
Central Bank of Mexico 2025-04-10
Central Bank of Mexico projects inflation reaching 3% in 2026 and signals scope for further rate cuts
In Senate testimony, the Central Bank of Mexico outlined its strategy to return inflation to the 3% target, reducing the policy rate from 11.25% to 9.00% through several cuts. The bank projects headline inflation reaching 3% by Q3 2026 amid economic slowdown and trade tensions. It also reported the financial system's strong capitalisation and liquidity, with measures to enhance competition and transparency, including a credit application platform and significant payroll-portability requests.