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Investing.com -- The Bank of Mexico, commonly known as Banxico, is expected to continue reducing its benchmark interest rate due to the ongoing inflationary environment in the country. This information was confirmed by the head of the bank in a recent Reuters interview. The initiative to bring down inflation has advanced into a new phase, requiring lower interest rates to effectively address the challenges.
Banxico made a significant cut to the key rate on Thursday, reducing it by 50 basis points to 9.50%. This decrease is twice as large as the 25-basis-point cuts that the bank had been implementing since it started to lower borrowing costs from a record high of 11.25% in March 2024.
Banxico Governor Victoria Rodriguez emphasized that the bank’s work is far from over. "The fight against inflation is now in a new phase," she stated. "In order to face the challenges of this new phase, we need lower (interest) rates," Rodriguez added.
Rodriguez also expressed confidence in the cooperative efforts of authorities from both Mexico and the U.S. Despite potential uncertainties, she assured that the bank will remain vigilant to any developments that may arise in March.
The governor highlighted the importance of trade integration in fostering economic growth. She pointed out that Mexico’s active involvement in U.S. production chains has been beneficial, providing U.S. consumers with access to competitively priced products.
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