Banxico Monetary Policy Statement - 2025-12-18
Central bank: banxico | Type: decision | Date: 2025-12-18

December 18, 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 7.00%, effective December 19, 2025.
The rate of expansion of world economic activity is estimated to have continued declining in the fourth
quarter of 2025 with respect to the previous quarter. Given the current trade tensions, the world economy
as well as that of the United States are still anticipated to register lower economic growth this year and
in 2026 with respect to 2024. In the major advanced economies, headline inflation has exhibited a
differentiated behavior during the second half of the year, while core inflation has continued showing
resistance to decline. The Federal Reserve lowered its reference rate by 25 basis points. Financial
markets registered minor variations. The US dollar depreciated. US government interest rates decreased
for most terms. 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 increased for most
terms. The Mexican peso appreciated. Economic activity is expected to have remained weak in the fourth
quarter of 2025 . The environment of uncertainty and trade tensions continues posing significant
downward risks.
Between the first fortnight of October and the month of November, headline inflation increased from 3.63
to 3.80%, while core inflation, from 4.24 to 4.43%, mainly due to a rise in non-food merchandise inflation.
Headline inflation expectations for the end of 2025 were revised slightly downwards, while those for
longer terms continued relatively stable at levels above target.
Headline and core inflation forecasts were adjusted upwards for the fourth quarter of 2025 and
subsequent two quarters. This adjustment responds mainly to a more gradual-than-expected reduction
in services inflation, as the increase registered in merchandi se inflation has a lesser impact on the
forecast revision. 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) depreciation of the Mexican
peso; ii) persistence of core inflation; iii) cost-related pressures; iv) disruptions due to geopolitical conflicts
or foreign trade policies , and v) climate-related impacts. On the downside: i) lower -than-anticipated
economic activity; ii) a lower passthrough from increased costs, and iii) lower pressures stemming from
the appreciation of the national currency. The f iscal adjustments are estimated to have a temporary
effect, not necessarily proportional, on prices. Nevertheless, a comprehensive assessment of their impact
will require incorporating additional information as it becomes available. In this regard, the Governing
Board will evaluate updating the inflation forecast to reflect the effects associated with said measures
more accurately. 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 US administration continue adding 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 7.00%.
Looking ahead, the Board will evaluate the timing for additional reference rate adjustments . 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 7.25%.
1/ Forecast starting in December 2025.
2/ Forecast starting in October 2025. See monetary policy statement of November 6, 2025. Forecast presented in the Quarterly Report
July-September 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.
I II III IV I II III IV I II III IV
Headline (CPI)
Current (12/18/2025)1/ 3.7 4.2 3.6 3.7 3.7 3.3 3.0 3.0 3.0 3.0 3.0 3.0
Previous (11/06/2025)2/ 3.7 4.2 3.6 3.5 3.5 3.2 3.0 3.0 3.0 3.0 3.0
Current (12/18/2025)1/ 3.6 4.1 4.2 4.3 4.0 3.4 3.0 3.0 3.0 3.0 3.0 3.0
Previous (11/06/2025)2/ 3.6 4.1 4.2 4.1 3.8 3.3 3.0 3.0 3.0 3.0 3.0
Annualized seasonally adjusted quarterly variation in percent 3/
Current - Headline 1/ 2.6 5.6 2.9 3.4 3.0 3.2 2.5 3.2 3.0 3.2 2.6 3.1
Current - Core 1/ 4.3 4.9 4.3 3.6 3.1 2.6 2.9 3.3 3.1 2.7 2.8 3.2
Forecasts for Headline and Core Inflation
Annual percentage change of quarterly average indices
2025 2026 2027