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Investing.com - Bank of America expects Mexico’s central bank Banxico to implement a 25 basis point rate cut in September, according to a report released Monday.
The financial institution forecasts a total of 125 basis points in rate cuts through year-end 2026, which would push Mexico’s benchmark interest rate down to 6.50% by the end of that period.
BofA’s outlook is based on expectations that both headline and core inflation in Mexico will fall below 4% next year, driven by three key factors: weak economic activity with an already negative output gap, weak formal job creation, and a relatively strong Mexican peso.
Despite the projected September cut, Bank of America indicates a pause in the rate-cutting cycle is likely in the near term before resuming the downward trajectory through 2026.
The bank noted that the primary risk to its forecast would be even lower rates in 2026 than currently projected, suggesting the possibility of a more aggressive easing cycle than outlined in its base case.
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