Banxico Board discusses global uncertainty and inflation challenges
The Banco de México Governing Board met on March 25, 2026, to discuss its monetary policy decision. Members analyzed global economic activity, geopolitical tensions, and persistent inflation pressures, noting increased uncertainty.
Global economy faces rising uncertainty
Members noted global economic activity is expected to expand faster in Q1 2026, particularly in the United States, supported by non-residential investment and household spending.
US labor markets showed signs of cooling, with unemployment rising to 4.4 percent in February, its highest since 2021.
Purchasing managers' indices suggest increased dynamism in global manufacturing and services.
The majority highlighted heightened global uncertainty due to intensifying geopolitical tensions, especially the Middle East conflict, which could negatively impact global activity.
Oil prices increased significantly, with Brent crude trading above $100 per barrel, levels not seen since 2022, driven by disruptions to a key trade route.
Strategic oil reserves were released to mitigate price increases.
Inflation remains persistent, central banks cautious
Global inflation advanced towards central bank targets, but persistent services inflation remains a challenge.
US headline CPI decreased from 2.7% in December to 2.4% in February, with core inflation moderating.
The Fed's median inflation forecast for end-2026 increased from 2.4% to 2.7%.
Most central banks adopted a cautious tone; many, including the Euro Area, UK, and US, maintained rates.
The Reserve Bank of Australia, however, raised its rate by 25 basis points.
The Fed held its federal funds rate steady in March, citing high uncertainty and upward inflation revisions.
Global risks persist
Banxico's minutes reveal deep concern over global geopolitical tensions and their inflationary impact.
While some economic moderation is noted, persistent services inflation demands continued vigilance.
This careful assessment highlights the difficult balance for future policy decisions.