Mexico cuts interest rate by 25 basis points to 10.75%

By Ovunc Kutlu

ISTANBUL (AA) - Mexico's central bank on Thursday lowered the target for the overnight interbank interest rate by 25 basis points to 10.75% from 11%.

The moves marks the second rate cut for Banco de Mexico, which reduced its policy rate by 25 basis points on March 21 to 11% from 11.25%.

"Mexican financial markets were affected by the volatility in international financial markets," Banco de Mexico’s Governing Board said in a monetary policy statement. "The Mexican peso depreciated."

The central bank said annual headline inflation rose to 5.57% in July, while core inflation showed a year-on-year gain of 4.05%.

"In view of the supply shocks that have affected non-core inflation, the forecasts for headline inflation were revised upwards for the short term," said the statement.

The bank said annualized seasonally adjusted core inflation is expected to be 3.7% in the third quarter of this year.

Banco de Mexico last made a rate increase in March 2023 that pushed the interest rate to a record 11.25%.