MEXICO CITY (Reuters) – Most of the Bank of Mexico’s five governing board members agreed that the risks associated with U.S. President Donald Trump’s tariffs will exert both upward and downward pressures on Mexican inflation.
“They pointed out that, on the one hand, there is a greater possibility of a further exchange rate depreciation and, on the other, a greater risk of a further economic weakening,” said the Mexican central bank on Thursday in minutes of its last monetary policy meeting.
Banxico, as the bank is known, delivered a unanimous 50-basis-point interest rate cut to 9.00% on March 27, highlighting progress on inflation but warning of heightened uncertainty relating to trade tensions and a weakening economy.
Some board members mentioned that weakness in the Mexican economic activity “is expected to have deepened in the first quarter of 2025,” said the minutes.
A first-quarter contraction would mark a technical recession, after the economy shrunk in the fourth quarter – its first quarterly contraction since the pandemic.
One board member underscored that the effects of the uncertainty resulting from U.S. tariffs were already reflected in an additional weakening of the Mexican economy, according to the minutes.
(Reporting by Anthony Esposito and Rafael Escalera Montoto; Editing by Stefanie Eschenbacher)
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