Background on Banxico and its Role
The Bank of Mexico (Banxico) is the country’s central bank, responsible for managing monetary policy to maintain price stability and support economic growth. As the central bank, Banxico plays a crucial role in shaping Mexico’s financial landscape and influencing the country’s economic trajectory.
Recent Interest Rate Decision
In its latest monetary policy meeting of 2025, Banxico decided to lower the benchmark interest rate by 25 basis points, bringing it down to 7%. This decision was made with a majority vote of 4-1, with Subgobernador Jonathan Heath being the sole dissenter.
Ciclo de Recortes (Cycle of Cuts)
The cycle of interest rate reductions began in March 2024, when Banxico lowered the reference rate from 11.25% to 7%. This series of thirteen adjustments represents a cumulative cut of 425 basis points.
- The majority of these cuts, 70%, have occurred in the eight announcements made in 2025, reducing the rate from 10% to the current level of 7%.
- This period of eight cuts, solely from 2025, has been labeled by Banxico as the “calibration of the interest rate.” This phase consisted of four 50-basis-point reductions in February, March, May, and June, followed by four smaller quarter-point cuts in August, September, November, and December.
Voting Patterns in the Ciclo de Recortes
Throughout the cycle of reductions, Banxico’s voting pattern has shown a mix of unanimous decisions and majority votes. Out of the ten decisions made since March 2024, five have been unanimous (in March, November, and December of 2024, as well as in March and May of 2025), while the remaining five decisions, including the most recent one in December 2025, were made by a majority.
Key Questions and Answers
- Who is Banxico? The Bank of Mexico (Banxico) is the country’s central bank, responsible for managing monetary policy to maintain price stability and support economic growth.
- What is the significance of the recent interest rate decision? Banxico lowered its benchmark interest rate to 7% in a 4-1 vote during its last monetary policy meeting of 2025, continuing the cycle of reductions initiated in March 2024.
- What is the “ciclo de recortes” (cycle of cuts)? The cycle of interest rate reductions began in March 2024 and has since seen thirteen adjustments, with a cumulative cut of 425 basis points. The majority of these reductions have occurred in 2025.
- What is the “calibration of the interest rate”? This phase within the cycle of reductions refers to four 50-basis-point cuts in February, March, May, and June of 2025, followed by four smaller quarter-point cuts in August, September, November, and December.
- What has been the voting pattern in Banxico’s decisions? Out of ten decisions made since March 2024, five have been unanimous, while the remaining five decisions, including the most recent one in December 2025, were made by a majority.
