Mexico central bank sells 3-month CETES; average yield 7.08%

The Mexican central bank conducted a sale of 3-month Certificados de la Tesorería (CETES) on July 2, 2025, achieving an average yield of 7.95%. This auction aligns with the central bank's ongoing efforts to manage short-term interest rates and inflationary pressures. The 3-month CETES serve as a critical benchmark for Mexico's financial markets, reflecting investor confidence and monetary policy direction.

Market expectations indicate that headline inflation in Mexico may return to the central bank's target range of 3% (±1 percentage point) in early July 2025, according to a Reuters poll. The median forecast for annual headline inflation was 3.64%, a decline from 4.13% in late June. However, core inflation, which excludes volatile components like food and energy, is projected to rise to 4.30%, the highest level since mid-2024.

To address inflationary trends, the central bank reduced its benchmark interest rate by 50 basis points in June 2025, bringing it to 8.0%. This marked the fourth rate cut in 2025, with cumulative reductions totaling 325 basis points since early 2024. The decision was not unanimous, as Deputy Governor Jonathan Heath advocated for maintaining the rate. The bank has signaled a potential shift toward a more measured approach in future policy adjustments.

The next monetary policy decision is scheduled for August 7, 2025. Investors will closely monitor subsequent CETES auctions and inflation data to gauge the central bank's trajectory in balancing price stability and economic growth.