Mexico | Uneventful meeting reaffirms Banxico’s prolonged pause

Summary

By reiterating that “it will be appropriate to maintain the reference rate at its current level” and that the current stance is “well-suited” to the macroeconomic environment, the Board signaled that it is comfortable with the policy rate at its current level.

Key points

• Key points:
• In a unanimous decision, Banxico kept the policy rate unchanged at 6.50%, as widely expected, reiterating that holding rates at this level remains appropriate.
• While it acknowledged that the economy “registered a reactivation” in 2Q, it stressed that “economic slack is expected to continue throughout the forecast horizon.”
• Headline inflation forecasts for 3Q26 were revised down to 3.5% from 3.8%, while core inflation forecasts remained unchanged through the end of 2026.
• Banxico pushed back the convergence of inflation to 3% from 2Q27 to 4Q27, arguing that it would decline “more gradually than previously anticipated.”
• Today’s largely uneventful meeting reinforces our view that Banxico will keep the policy rate unchanged at its current 6.50% level through year-end.

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