Overview
- Moody’s Analytics argues that Banxico’s premature removal of monetary restraint in 2025—300 basis points of cuts—left policy neutral by September and weakened its anti-inflation commitment.
- Core inflation rose from about 3.7% at end-2024 to 4.3% at end-2025, with December at 4.34% and eight consecutive months above 4%.
- Market and analyst surveys, including Banxico’s own, now point away from reaching 3% by late 2026, with core expectations rising from roughly 3.6% mid-2026 to 3.8% by year-end.
- Moody’s recommends reversing the 2025 easing by halting further cuts or raising rates and keeping policy restrictive long enough to re-anchor core inflation near 3%.
- Banxico’s board has defended its decision-making and rejects talk of a credibility crisis, while board member Jonathan Heath dissented in 2025 over the rate cuts and warned about credibility.