Further rate cuts could worsen Mexico inflation risks

Significance The move followed an earlier 25-bp cut in March; inflation had been increasing significantly at that point and continues to do so. Impacts Higher inflation may push wage settlements upwards, increasing pressures on costs and prices. A weaker peso should help to keep the current account deficit at manageable levels, probably below 1% of GDP in 2024. Peso depreciation may boost tourism and incentivise Mexicans abroad to increase remittance payments to their families.