Bank of Mexico cuts key rate to 11%, says future moves to be data-dependent

By Valentine Hilaire and Anthony Esposito

MEXICO CITY (Reuters) -The Bank of Mexico, as expected, cut its benchmark interest rate by 25 basis points to 11.00% on Thursday, in a four-to-one decision by its governing board, marking the first rate reduction since the bank embarked on a tightening cycle in 2021.

Banxico, as the Mexican central bank is known, said it will thoroughly monitor inflationary pressures and that at its next monetary policy meetings, "it will make its decisions depending on available information."

Voting in favor of the rate cut were Banxico governor Victoria Rodriguez and deputy governors Galia Borja, Jonathan Heath, and Omar Mejia. Deputy governor Irene Espinosa voted to hold the rate at 11.25%.

Analysts polled by Reuters had overwhelmingly predicted the board would cut the rate by 25 basis points after holding it steady for seven straight policy meetings.

Banxico said that headline inflation is still forecast to converge to its target of 3%, plus or minus a percentage point, in the second quarter of 2025.

The cut contrasts with the U.S. Federal Reserve, which on Wednesday left interest rates unchanged, though Fed Chair Jerome Powell underscored that recent high inflation readings had not changed the underlying "story" of slowly easing price pressures in the U.S. as the central bank stayed on track for three interest rate cuts this year.

In Latin American regional powerhouse Brazil, the central bank on Wednesday cut its benchmark interest rate by 50 basis points at a sixth straight policy meeting, while flagging it may change the course of the current easing cycle after its next decision in May.

(Reporting by Valentine Hilaire and Anthony Esposito; Editing by Sarah Morland and Rosalba O'Brien)