Taking advantage of inflation that remains just below 4% (3.93% in April) and is forecast to fall over the 2nd half of the year, the Mexican Central Bank has cut its main key rate by 0.5% to 8.5%.
This third reduction in the cost of credit in 2025 marks the continuation of a cycle that began in March 2024, after a period of Mexican key rates at 11.25%.
This gradual normalisation of monetary policy aims to give the economy a much-needed boost. Following growth of 0.5% in the last quarter of 2024, Mexico started 2025 with growth of 0.6%.
No additional impacts from Liberation Day
However, the future looks bright. With its intense exposure to the US market, Mexico was expected to be one of the countries most affected by the uncertainty surrounding US tariffs.
But this has not been the case. While Trump multiplied his threats against most of his trading partners, Mexico was ignored, and on Liberation Day on 2 April, no additional customs duties were announced.
That was all it took for investors to see as tacit confirmation that Mexico would remain a privileged partner of the United States.
Keep your eyes on the stock market
A new wave of investment is expected, and since the start of the year, the Mexican stock market has outperformed the US market, with a gain of almost 10% (share price and dividends, in €).
We continue to invest in Mexico as part of our neutral and dynamic portfolios.
Banxico is continuing to cut its key rates. This should boost an economy that remains one of the big winners from the uncertainty created by the White House.
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