Mexico's central bank cut its benchmark rate to 6.75% in a split decision, as global markets closed lower amid the US-Iran war. The BMV fell 1.65%, and the peso depreciated 1% against the dollar. Oil prices rose due to the Strait of Hormuz closure.
On Thursday, March 26, Mexico's central bank (Banxico) Governing Board cut its benchmark interest rate by 25 basis points to 6.75%, despite inflation hitting its highest level since 2024. The vote was split: Jonathan Heath and Galia Borja favored keeping it at 7%, while the rest supported the cut. Banxico cited the exchange rate, economic weakness, the inflation outlook, and challenges from the US-Iran war in the Middle East, which closed the Strait of Hormuz through which 20% of global oil trade passes. It kept its forecast for 3% inflation in Q2 2027. After the decision, the exchange rate stood at 17.95 pesos per dollar, down 1.04%. In bank windows, the dollar was at 18.32 pesos per Banamex data. Stock markets also declined: the BMV's S&P/BMV IPC fell 1.65% to 67,001.34 points, ending three sessions of gains. Banco Base's Gabriela Siller noted only GCC (+1.71%) and Grupo Televisa (+0.78%) rose in the IPC. Wall Street saw drops: Nasdaq -2.38% to 21,408.08, S&P 500 -1.74% to 6,477, and Dow Jones -1.01% to 45,960.11. Oil prices rose: WTI +4.61% to $94.48 per barrel, Brent +4.38% to $106.85. LPL Financial's Adam Turnquist told Bloomberg: 'The war in Iran, and the consequent rise in oil prices continues to curb risk appetite.' Felipe Hernández told Bloomberg that high inflation and war risks suggest waiting for better conditions.
