Most members comprising the central bank board of Mexico said monetary policy needs a gradual adjustment, while policymakers appointed by the country's president voted again for steeper interest rate cuts.
Governor Alejandro De Leon, deputy governors Javier Guzman and Irene Espinosa voted for a quarter-point reduction in borrowing costs to 7.5 percent on November 14.
This, after a downturn in inflation and development, based on minutes released Thursday. Deputies Gerardo Esquivel and Jonathan Heath, for a second straight decision, voted for a steeper, half-point cut.
The minutes do not mention which of the five members of the board hold other opinions besides Esquivel and Heath's dissenting views. But it is possible that those who opted for the less drastic reduction were the same leaders who said they preferred incremental easing, said Alonso Cervera, chief economist for Latin America at Credit Suisse Group AG in Mexico City.
Most of the board pointed to the prevalence of core inflation, outside more unpredictable food and energy costs, as a threat that could continue given greater economic slackness. Banco de Mexico has a key mandate to achieve inflation of 3 percent.
Most economists expect the central bank in its final decision of the year on Dec. 19 to cut its policy rate by another quarter percentage point.
"Unless we see a very fast decline in core inflation or a very rapid increase in the peso, the rate cuts would tend to be the same 25 basis points," said Cervera.
He said policymakers are likely to continue to lower rates next year, eventually stopping after reaching about 6 percent. Esquivel argued that a quarter-point reduction was too small, too late in voting for a larger cut.
He cited inflation, slowing core prices, a decrease in global interest rates, and lowering risks as among key factors that will determine their goal. Mexico has the largest real interest rate among 20 nations after Turkey, or borrowing costs minus inflation.
Heath identified some of the same explanations for his decision, stating that despite international easing, the tightness of Mexico's strategy has not been diminished in comparison with the rest of the world.
Although Lopez Obrador has consistently stated he values the independence of the central bank, he said he needed policymakers to pay more attention to development.
The bank reduced its 2019 gross domestic product outlook from the previous 0.2 percent to 0.7 percent to a range of -0.2 percent to 0.3 percent on Wednesday. Since 2009, Mexico's economy has not experienced an annual contraction.
