Mexico's Central Bank Cuts Interest Rate To 8%: What It Means For The Economy

(MENAFN- The Rio Times) Mexico's central bank, Banxico, lowered its main interest rate from 8.5% to 8% on June 26, 2025. This is the fourth time this year Banxico has cut rates, trying to help the country's economy, which has been growing very slowly.

The decision comes as Mexico faces higher prices for many goods and services. Inflation, which means the general rise in prices, reached 4.51% in mid-June.

This is above the central bank' goal of 3%. The bank also noticed that prices for things like housing and travel have gone up the most, while some food prices have dropped.

Mexico's economy has struggled in 2025. Growth is expected to be just 0.6% for the year. Fewer jobs are being created, and exports and remittances are not growing as fast as before.

The Mexican peso has stayed mostly steady, but there is still a lot of uncertainty because of changes in trade with the United States and other countries.



Not everyone at Banxico agreed with the rate cut. One board member wanted to keep the rate at 8.5%, worried that lowering it too quickly could make inflation worse.

The bank now says it will be more careful about future cuts and will only lower rates again if the data supports it.
Mexico's Central Bank Cuts Interest Rate to 8%: What It Means for the Economy
Lower interest rates can help businesses and families by making loans cheaper, which can boost spending and investment.

However, if rates go down while prices keep rising, people may feel their money does not go as far. Banxico wants to help the economy without letting inflation get out of control.

Banxico's next meeting is in August. The bank will keep watching inflation and the economy closely before making more changes.

For now, the rate cut shows Banxico is trying to support growth, but it remains cautious because of the risk that prices could keep rising.

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