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The conflict in the Middle East has caused a global economic shock in 2026 that is impacting Latin America. Rising commodity prices and logistics costs have triggered a spike in inflation and a slowdown in economic growth.

The Eurozone and the United States are facing inflationary pressures that extend beyond energy, forcing the ECB and the Fed to raise their inflation forecasts. The central banks are shifting their course with varying degrees of determination.

The policy statement does not reveal how strongly Board members are committed to an extended pause, leaving the upcoming minutes as the key source to assess the strength of that consensus.

We expect Banxico to keep the policy rate unchanged at 6.50% this week and to reiterate its message that the current stance will remain in place for an extended period as it continues to monitor services inflation.

The hurdle for additional easing is now considerably higher than it was earlier this year, while the possibility of future rate hikes can no longer be dismissed if inflation fails to resume its path toward target.

The FOMC will most likely keep the fed funds target range unchanged at 3.50-3.75% and shift to a more two-sided approach to future policy guidance. The case for maintaining an easing bias has weakened materially as labor market downside risks appear to have diminished, while inflation progress has become less convincing.

Headline inflation remained at 3.2% year-on-year, mainly due to the deceleration of energy and food prices. However, core inflation ticked up to 3.0%. BBVA Research estimates that headline inflation could increase to 3.6% or 3.7% in June.