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Inflation in Spain moderated in June due to lower oil prices and government measures. However, over the medium term, higher business costs and the cyclical economic situation suggest that inflation will remain higher than that of the eurozone.

Headline inflation stabilized at 3.2% year-on-year in June, while core inflation eased by 0.1 pp to 2.9%. Both figures came in below expectations. Estimates for July suggest, however, that headline inflation could rise to between 3.5% and 3.7%.

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.