“Well, given the advance of disinflation, we consider that we can continue with the cuts in the reference rate and in the following meetings we will be assessing the inflationary outlook and making the corresponding decisions,” Rodríguez said late on Monday.
In October, core inflation, which excludes volatile energy and food prices, slowed to 3.80% in the 12 months to October, down from 3.91% in September. The annual general inflation rate rose to 4.76% last month, compared to 4.58% in September.
Banxico sets a general inflation target of 3%, with a margin of error of one percentage point.
“Depending on what we see in the inflation outlook, there could even be higher cuts,” Rodríguez said, referring to the fact that the four interest rate reductions this year, included in the last three consecutive meetings, have been 25 points. basic each one.
Meanwhile, the Mexican peso has weakened markedly in the last six months, as a series of reforms after the Mexican elections shook investor confidence in the country’s legal system and Donald Trump’s electoral victory in the United States fuels uncertainty about the future of the critical bilateral trade relationship.
Still, following the US elections, market operating conditions have remained “relatively orderly,” Rodríguez said, adding that while Banxico has not had to take any action, it was monitoring the situation and ready to act if necessary. necessary.
“If operating conditions require it, we could, if necessary, intervene and we are permanently attentive,” Rodríguez said.
On Friday, Mexico’s Ministry of Finance presented the highly anticipated government budget for 2025 predicting that the Budget deficit next year will be reduced to 3.9% of the Gross Domestic Product (GDP) as economic growth increases and government plans sharp spending cuts including defense and security.
Market watchers were closely monitoring the budget as the government is under pressure to reduce the deficit which is expected to close this year at 5.9% of GDP, the highest since the 1980s.
“An important element that I would like to highlight is that after the package was announced this past Friday, the financial markets maintained an orderly behavior, which is undoubtedly a positive sign,” said Rodríguez.
