The Bank of Mexico's decision to cut interest rates reflects a convergence of macroeconomic factors, including U.S. Federal Reserve actions and a declining inflation trajectory in Mexico.
With the U.S. Federal Reserve's recent 50 basis point cut, Banxico found an opportunity to push forward its monetary policy normalization, decreasing rates without risking currency volatility.
Banxico's ability to cut rates was also influenced by a renewed stability in the Mexican peso, bolstering confidence in its monetary policy while maintaining market stability.
The revised inflation forecast, expecting a decline to 4.3% by year-end, further supports Banxico's decision to implement rate reductions as part of price stability efforts.
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