Banxico Monetary Policy Statement - 2025-08-07
Central bank: banxico | Type: decision | Date: 2025-08-07

August 7, 2025
This document is provided for the reader’s convenience only. The translation from the official Spanish version was made by Banco de México’s
staff. Discrepancies may possibly arise between the original document in Spanish and its English translation. For this reason, the original Monetary
Policy Statement in Spanish remains the only official document.
Banco de México’s Governing Board decided to lower the target for the overnight interbank
interest rate by 25 basis points to 7.75%, effective August 8, 2025.
World economic growth is estimated to have expanded during the second quarter of 2025 at a slightly
higher rate than in the previous quarter. Given the current trade tensions, the world economy as well as
that of the United States are still expected to decelerate this year and in 2026 with respect to 2024.
Financial markets continued registering lower levels of volatility. The US dollar appreciated. US
government interest rates decreased, while those of most of the major advanced economies increased
slightly, especially long-term ones. Headl ine and core inflation showed a heterogeneous behavior across
countries. In its latest decision, the Federal Reserve left its reference rate unchanged. Among the most
relevant global risks are the escalating trade tensions along with the intensification of geopolitical turmoil
and their possible impact on inflation, economic activity, and volatility in financial markets.
Since the previous monetary policy decision, Mexico’s government interest rates decreased along the
yield curve. The Mexican peso fluctuated without a definite trend. According to GDP’s flash estimate, the
economy grew during the second quarter of 2025 at a rate higher than in the previous one. Nevertheless,
economic slack prevails due to the weakness that the economy has been exhibiting. The environment of
uncertainty and trade tensions poses significant downward risks.
Headline inflation decreased from 4.51% to 3.51% between the first fortnight of June and the month of
July. This result was a consequence of a decline in the non-core component. Core inflation shifted from
4.20% to 4.23% during the same period. Headline inflation expectations for the end of 2025 were revised
upwards while those for longer terms continued relatively stable at levels above target.
Headline inflation forecasts remained practically unchanged. Core inflation forecasts were revised slightly
upwards for the short term. Headline inflation is still expected to converge to the target in the third quarter
of 2026 (see table). Forecasts are subject to the following risks. On the upside: i) foreign exchange
depreciation; ii) disruptions due to geopolitical conflicts or foreign trade policies; iii) persistence of core
inflation; iv) cost -related pressures; and v) climate- related impacts. On the downside: i) lower-than-
anticipated economic activity; ii) a lower pass-through from increased costs, and iii) lower pressures
stemming from the recent appreciation of the Mexican peso. Although the balance of risks for the trajectory
of inflation within the forecast horizon remains biased to the upside, said bias is less pronounced than
that faced between 2021 and 2024. The changes in economic policy by the new US administration have
added uncertainty to the forecasts. Their effects could imply inflationary pressures on both sides of the
balance.
The Governing Board deemed appropriate to continue the rate -cutting cycle. This decision was
consistent with the assessment of the current inflationary outlook. In particular, it took into account the
behavior of the exchange rate, the weakness of economic activity, and the possible impact of changes
in trade policies worldwide. It also considered the level of monetary restriction that has been implemented.
Thus, with the presence of all its members , the Board decided by majority to lower the target for the
overnight interbank interest rate by 25 basis points to 7.75%.
Looking ahead, the Board will assess further adjustments to the reference rate. It will take into account
the effects of all determinants of inflation. Actions will be implemented in such a way that the reference
rate remains consistent at all times with the trajectory needed to enable an orderly and sustained
convergence of headline inflation to the 3% target during the forecast period. The central bank reaffirms
its commitment to its primary mandate and the need to continue its efforts to consolidate an environment
of low and stable inflation.
Voting in favor of the decision were Victoria Rodríguez, Galia Borja, Gabriel Cuadra, and Omar Mejía.
Jonathan Heath voted in favor of maintaining the target for the overnight interbank interest rate at 8.00%.
1/ Forecast starting August 2025.
2/ Forecast starting June 2025. See monetary policy statement of June 26, 2025.
3/ See methodological note on the seasonal adjustment process.
Source: INEGI for observed annual variation figures and Banco de México for seasonally adjusted figures and forecasts. Note:
Shaded areas correspond to observed figures.
III IV I II III IV I II III IV I II
Headline (CPI)
Current (08/07/2025) 1/ 5.0 4.5 3.7 4.2 3.8 3.7 3.4 3.1 3.0 3.0 3.0 3.0
Previous (06/26/2025) 2/ 5.0 4.5 3.7 4.3 4.1 3.7 3.4 3.1 3.0 3.0 3.0 3.0
Current (08/07/2025) 1/ 4.0 3.7 3.6 4.1 4.1 3.7 3.5 3.1 3.0 3.0 3.0 3.0
Previous (06/26/2025) 2/ 4.0 3.7 3.6 4.1 3.8 3.6 3.4 3.1 3.0 3.0 3.0 3.0
Annualized seasonally adjusted quarterly variation in percent3/
Current - Headline 1/ 5.3 3.1 2.8 5.8 3.7 2.9 2.4 3.5 3.2 2.8 2.5 3.3
Current - Core1/ 3.6 3.5 4.2 5.0 3.7 2.6 3.2 3.0 3.1 2.7 3.1 3.0
Forecasts for Headline and Core Inflation
Annual percentage change of quarterly average indices
2024 2025 2026 2027