By Ana Isabel Martinez

MEXICO CITY () – Mexico’s central bank board could discuss a rate cut of either 25 basis points or 50 basis points in its next decision in February, Deputy Governor Jonathan Heath told , even as he warned of growing uncertainty regarding U.S. trade.

Heath stipulated that the final decision would depend on the conditions at the time of the meeting.

The monetary authority has been cutting rates by 25 basis points since kicking off an easing cycle earlier this year, but said last week it was open to larger cuts as inflation continues to slow.

But Heath warned that the possibility of tariffs on U.S. imports from Mexico has added uncertainty. In November, President-elect Donald Trump promised to apply a blanket 25% tariff on goods from Mexico if more action is not taken to curb the flow of drugs and migrants into the United States.

“If Trump doesn’t announce a major disruption (in his inauguration speech on) Jan. 20, if inflation is in line with projections and as long as there’s no unanticipated shock, discussion prior to the February decision could be between cutting the benchmark rate by 25 to 50 basis points,” Heath said in a written response to questions on Monday.

The 70-year-old economist added that the decision was dependent on other factors such as the economic outlook, ratings agencies’ perspectives and more information on services inflation, which has been sticky.

“Even if the discussion takes place, the larger adjustment is not a given,” Heath said.

But anything larger than a 50-basis-point cut from the current 10% rate would be “completely out of the question,” Heath said.

Even then, the decision from the board may not be unanimous, Heath said, as the other board members differ on the speed and size of rate cuts to bring inflation back within target.

With the current information, the benchmark rate ending 2025 between 8% and 8.5% is “reasonable,” Heath said, but warned a number of factors could influence that.

Analysts polled by the central bank expect the Mexican economy to grow just 1.12% next year, from around 1.6% this year. They see headline inflation closing 2025 at 3.8%, slowing from 4.37% at end-2024.

Heath attributed the expected slowdown to cautiousness from the private sector in the face of an uncertain and high-risk environment, as well as a tight fiscal policy with little wiggle room as the government works to rein in the deficit.

“However, as long as the sluggishness persists, the more likely it is that we’ll reach our inflation target in the time frame estimated,” he said. “That will lead us to continue lowering the rate until we reach a neutral stance.”

In 2026, if Mexico is not hit with any negative shocks, inflation should come to within 3%, the monetary stance should be neutral and the economy will be in full-throttle expansion, Heath said.