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(Bloomberg) — Mexico’s central bank may vote unanimously to hold borrowing costs at 11% at its next meeting in May, a deputy governor said.

Banco de Mexico views its March rate cut as a first adjustment instead of part of rapid policy normalization, said Deputy Governor Jonathan Heath said in an interview on the sidelines of the annual International Monetary Fund meetings.

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“I’m leaning toward a pause in May, and we can see how data evolves by June,” Heath said Friday in Washington DC.

The economic scenario hasn’t changed from March’s rate decision, when the board delivered a quarter-point reduction but refrained from signaling more immediate cuts ahead. A pause in May is “likely” to be unanimous, Heath said.

“Just because we cut in March it doesn’t mean we formally began a process of rate drops,” he said. 

Mexico’s central bank, known as Banxico, delivered its first post-pandemic rate cut last month — after all other major inflation-targeting central banks in Latin America — and signaled that any future reductions will be gradual. 

Consumer price rises have waned to 4.42% from a year prior, with core measures excluding energy and food also slowing. Still, as the Federal Reserve signals it will delay its own easing, many investors expect its southern neighbor will pause next month.

To Heath, Mexico hasn’t launched an rate-cutting cycle but rather delivered a “needed fine tuning” to hold monetary policy at just the right restrictive level. “It was a first adjustment because we don’t want to change our restrictive stance,” he explained. 

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Rates should be in a range of 7% to 7.5% when adjusted by future inflation expectations, he added. When they exceed it, there could be room for another “small adjustment,” likely of a quarter point.

“That is my personal range, no one in the board put a number and it’s not set in stone,” he said. “I’m just a numbers guy.”   

Mexico keeps a close eye on the difference between its own benchmark lending rates and the Federal Reserve’s, to avoid outflows of capital, though Banxico board members have long insisted they make decisions independently.

On Tuesday, Fed Chair Jerome Powell signaled policymakers will wait longer than previously anticipated to cut interest rates following a series of surprisingly high inflation readings.

Still, Banxico is at an acceptable rate differential with the US with more concerning domestic worries such as above target inflation. “But our rate decisions in May and June are independent from the Fed.” 

Mexican policymakers lowered rates by a quarter-point to 11% from an all-time high last month in a split vote. Irene Espinosa, the one member who voted to hold borrowing costs, said monetary policy faced additional challenges, including pressures from wage increases and expansionary fiscal policy. Earlier this week, Espinosa said Mexico is not at the beginning of a prolonged easing cycle, in a separate interview with Bloomberg News.  

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Following the May meeting, decisions are likely to be split though there’s agreement among the board that when the normalization process begins it will be with very gradual and cautious rate cuts, Heath said. 

“No one is thinking of drops bigger than 25 basis points, as far as I can tell.”

Economic growth in Latin America’s second-largest economy has been driven by the process known as near-shoring, whereby companies set up local operations to serve clients across North America. President Andres Manuel Lopez Obrador is also boosting spending in his final months in office, resulting in the biggest budget deficit since the 1980s.

Those factors are also fueling inflation concerns among Mexican central bankers and private-sector economists. Analysts currently see consumer price increases above the 3% target through 2025. 

Banxico wants to see consumer price increases again in a steady downward trend, with a break in services inflation, which so far has been resilient. “We believe we are close, but we need to see costs of services in a clear downward tendency,” Heath added.  

—With assistance from Maya Averbuch.

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