The Bank of Mexico (Banxico) has decided to cut its benchmark interest rate by 25 basis points, bringing it to 6.75%. This decision comes after data showed that the annual inflation rate rose to 4.63% in the first half of March. Despite inflation increasing every month so far this year, Banxico expects the headline rate to converge to the bank's 3% target in Q2 of 2027. The decision was not anticipated by most analysts. The bank noted that its board considered the current monetary policy stance adequate to face challenges posed by an extension and escalation of the Middle Eastern conflict.