MEXICO CITY, June 27, 2025 (BSS/AFP) - Mexico's central bank on Thursday announced a fourth straight half-percentage-point cut to its benchmark interest rate to counter the effects of an expected global economic slowdown.

The governing board's decision to lower the key rate to 8.0 percent was not unanimous, however, with one of the five members opposing a reduction, the Bank of Mexico said in a statement.

That reflects the twin challenges facing the central bank of dealing with both sluggish economic growth and resurgent inflation.

Global risks included "escalating trade tensions along with the intensification of geopolitical turmoil and their possible impact on inflation, economic activity, and volatility in financial markets," the bank said.

Mexico's economy, the second-largest in Latin America, is considered particularly vulnerable to US President Donald Trump's tariffs due to the close trade relations between the two countries.

"Given the foreign trade tensions, the world economy as well as that of the United States are expected to decelerate this year and in 2026," the Bank of Mexico said.

Analysts noted a change in tone from last month. Thursday's statement dropped a remark that further rate cuts of "similar magnitudes" were likely.

Instead, it said that future changes to the benchmark rate would take into account the need to bring the inflation rate down to the official target of three percent.

"Economic activity in Mexico has been slowing... but at the same time, inflation is once again rearing its ugly head," Dutch financial group Rabobank said in a note to clients.

Consumer prices rose by 4.4 percent in the year to May, marking an acceleration compared with April's figure of 3.9 percent.

Rabobank expects smaller interest rate cuts of 0.25 percentage points at the Bank of Mexico's next two meetings.

"The governing board expects inflation to get worse before it gets better," it said.