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By KELIN DILLON

On Thursday, March 27, the Bank of Mexico (Banxico) slashed its interest rate by 50 basis points, bringing Mexico’s interest rate from 9.5 to 9 percent – its lowest rate since September 2022.

Banxico’s Board of Governors reportedly voted unanimously to approve the cuts, which were widely anticipated by economic analysts and international banks.

The move comes as Mexico’s inflation rate cools, reaching 3.67 percent in March.

This figure aligns with Banxico’s inflation targets, which it aims to keep at the 3 percent range, plus or minus one percentage point.

However, the Banxico Board of Governors noted that the impending tariffs threatened by U.S. President Donald Trump could affect Mexico’s inflation rate.

“It highlights the escalation of trade tensions and the worsening of geopolitical conflicts, with potential impacts on inflation, economic weakening, and volatility in financial markets,” said Banxico’s monetary policy report.

It went on to say that Mexico is likely to face challenges in its first economic quarter,  as “the environment of uncertainty and trade tensions implies significant downside risks.”

The Board of Governors also indicated that it could slash interest rates by another 50 basis points come its May 15 meeting in what would be its seventh consecutive cut, “while maintaining a restrictive stance.”