Banxico Lowers Rate Again By 25 Bps To 7.25%

(RTTNews) - The Bank of Mexico lowered its key interest rate for an eleventh policy session in a row in a bid to bring inflation close to the 3 percent target and to support a sluggish economy facing significant uncertainty due to trade tensions, and signaled more rate cuts ahead.

The Banxico Governing Board, led by Governor Victoria Rodríguez Ceja, cut the target for the overnight interbank interest rate by 25 basis points to 7.25 percent, as expected, in a split vote of 4-1. Deputy Governor Jonathan Heath again favored a decision to maintain the rate unchanged.

The previous change was a similar reduction in September that followed four half-points cuts since the start of the year and quarter-point reduction in August.

The central bank has cut interest rates by a total 375 basis points in the current rate-cutting cycle that began in August last year.

"The Governing Board deemed appropriate to continue the rate-cutting cycle," the Banxico said.

Policymakers considered the current inflationary outlook, the exchange rate, the weaker economic activity and the possible impact of trade deals as well as the level of monetary restriction.

"Looking ahead, the Board will evaluate reducing the reference rate," the central bank said.

Headline inflation and core price growth slowed slightly in the first two weeks of October. Short term inflation expectations have eased, while those for the longer term remains above target.

The Banxico lowered the headline inflation forecast for the fourth quarter to 3.5 percent from 3.6 percent. The core inflation projection, however, was raised to 4.1 percent from 4.0 percent.