Banxico Monetary Policy Statement - 2025-05-15
Central bank: banxico | Type: decision | Date: 2025-05-15

May 15, 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 50 basis points to 8.50%, effective May 16, 2025.
World economic growth is estimated to have expanded during the first quarter of 2025 at a rate lower
than that observed in the previous quarter . In view of the foreign trade tensions, prospects for world
economic growth, particularly those for the US economy , have been revised downwards. In this
environment of high uncertainty, the US dollar depreciated. Short- and medium-term government interest
rates ended the period with mixed results, after having decreased significantly along the yield curve. In
most of the main advanced economies, headline and core inflation recently reverted part of the increases
registered by both in early 2025. In its latest monetary policy decision, the US 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, on economic activity,
and on volatility in financial markets.
Since the previous monetary policy decision, Mexico’s government interest rates decreased, especially
those for the short and medium terms. The Mexican peso appreciated, although it traded in a wide range.
The Mexican economy exhibited weakness again during the first quarter of 2025 . It registered a low
seasonally adjusted quarterly growth rate of 0.2% , after having contracted in the previous quarter. The
environment of uncertainty and trade tensions poses significant downward risks.
Both headline and core inflation came in at 3.93% in April. Core inflation accumulated eight consecutive
months below 4%, although, at the margin, it increased. Headline inflation expectations for the end of 2025
were revised upwards while those for longer terms remained relatively stable at levels above target.
Inflation forecasts were adjusted upwards in the short term, mainly due to a greater-than-expected
increase in merchandise inflation. 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 some cost-related pressures, and iii) a lower-
than-anticipated pass-through of the peso depreciation on inflation. Although the balance of risks for the
trajectory of inflation within the forecast horizon remains biased to the upside, it has improved as the
global shocks have been fading. 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 reiterated that, since the inflationary episode has been left behind, the fight against
inflation is at a stage where the aim is to bring inflation from its current level, around its pre-pandemic
historical average, to the 3% target. It considered that reference rate levels lower than those set as a
result of the global shocks are consistent with the challenges posed by the present stage . 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. Considering the current inflationary outlook and the prevailing
level of monetary restriction, with the presence of all its members, the Board decided unanimously to lower
the target for the overnight interbank interest rate by 50 basis points to 8.50%.
The Board estimates that looking ahead it could continue calibrating the monetary policy stance and
consider adjusting it in similar magnitudes . It anticipates that the inflationary environment will allow to
continue the rate cutting cycle, albeit maintaining a restrictive stance. It will take into account the effects
of the country’s weak economic activity and the incidence of both the restrictive monetary policy stance
that has been maintained and the stance prevailing in the future on the evolution of inflation throughout
the horizon in which monetary policy operates. 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.
1/ Forecast starting May 2025.
2/ Forecast starting March 2025. See monetary policy statement of March 27, 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.
II III IV I II III IV I II III IV I
Headline (CPI)
Current (05/15/2025) 1/ 4.8 5.0 4.5 3.7 3.9 3.5 3.3 3.2 3.1 3.0 3.0 3.0
Previous (03/27/2025) 2/ 4.8 5.0 4.5 3.7 3.5 3.4 3.3 3.2 3.1 3.0 3.0 3.0
Current (05/15/2025) 1/ 4.2 4.0 3.7 3.6 3.9 3.6 3.4 3.3 3.0 3.0 3.0 3.0
Previous (03/27/2025) 2/ 4.2 4.0 3.7 3.6 3.5 3.4 3.3 3.2 3.0 3.0 3.0 3.0
Annualized seasonally adjusted quarterly variation in percent3/
Current - Headline 1/ 3.9 5.2 3.0 2.8 4.6 3.3 2.6 2.6 3.6 3.1 2.5 2.7
Current - Core1/ 3.5 3.6 3.5 4.2 4.1 2.7 3.0 3.3 3.3 2.6 3.0 3.1
Forecasts for Headline and Core Inflation
Annual percentage change of quarterly average indices
2024 2025 2026