March 30 (Reuters) – The Bank of Mexico may soon end its period of rate cuts, Governor Victoria Rodriguez said in an interview published on Monday, in which she defended the central bank’s decision last week to cut its benchmark interest rate despite concerns about rising inflation.
“When assessing the inflation outlook and the evolution of its determinants, I believe we are close to concluding the period of adjustments to the benchmark interest rate,” Rodriguez told El Financiero.
Banxico, as the Bank of Mexico is known, cut its benchmark interest rate last week by 25 basis points to 6.75% in a sharply divided vote that was one of the most closely watched and uncertain decisions in recent years.
The 3-2 decision by the central bank’s five-member board underscores a growing divide among the bank’s policymakers, with a slim majority supporting a rate cut that could stimulate the economy, despite fears about rising inflation and climbing gas prices fueled by the war in the Middle East.
Annual headline inflation in Mexico accelerated to 4.63% in early March, its highest level since 2024 and well above Banxico’s 2% to 4% tolerance range, fueling the case for a rate pause to curb price pressures.
Rodriguez told El Financiero that increase was a temporary blip driven by volatility in fruit and vegetable prices, but acknowledged the “balance of risks to inflation remains tilted to the upside” given the war in Iran and changes to U.S. economic policy.
Still, she reiterated that convergence to the bank’s 3% percent inflation target remains projected for the second quarter of 2027.
(Reporting by Ana Isabel Martinez; Writing by Brendan O’Boyle; Editing by Emily Green)
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