Mexico's central bank seen cutting key rate to 9% next week: Reuters poll

By Noe Torres and Gabriel Burin

MEXICO CITY/BUENOS AIRES (Reuters) - The Bank of Mexico will likely cut its benchmark interest rate by 50 basis points at its meeting on March 27, taking it to 9%, according to a Reuters poll on Friday, amid slowing inflation and a weak outlook for the economy.

Of 25 economists surveyed, 23 expect the central bank to deliver a cut of 50 bps, as it did in February, speeding up a rate-cutting cycle that began last year when the rate was a record 11.25%.

The other two economists expected Banxico, as Mexico's central bank is known, to hold its rate steady. That would be in line with the U.S. Federal Reserve decision this week to hold rates. The Fed highlighted uncertainty around U.S. President Donald Trump's shifting tariff policies.

At the last monetary policy meeting, Banxico said it would consider future rate adjustments similar to its February cut of half a percentage point if the inflation outlook allows.

The annual headline inflation rate has been falling since reaching 8.7% in 2022, its highest level in more than two decades. Inflation hit 3.77% in the 12 months through February, within Banxico's official target of 3% plus or minus a percentage point.

On Monday, the national statistics agency will release data that is expected to show inflation slowing in the first half of March.

"The inflation scenario hasn't changed," said James Salazar, deputy director of economic analysis at CIBanco, whose forecast was included in the poll. "That provides grounds and consolidates the idea that another 50-basis-point cut is coming."

While economic growth does not fall under Banxico's remit, analysts believe a weak outlook for Latin America's second-largest economy, weighed down by Trump's tariff threats, could put additional pressure on the governing board to continue reducing borrowing costs.

Mexico's gross domestic product shrank in the fourth quarter for the first time in more than three years, contracting 0.6%.

Of 17 analysts who shared forecasts for Banxico's subsequent decision on May 15, all but one foresee another rate cut at that meeting, although the group was divided on the magnitude.

The key rate is expected to close the year at 8.25%, which would be its lowest level in nearly three years, according to the median of 19 forecasts received for the final quarter of 2025.

(Reporting by Noe Torres; Additional reporting by Gabriel Burin; Editing by Brendan O'Boyle, Anthony Esposito and Rod Nickel)