Policy rate held at 6.50 percent as inflation nears target
Banco de México unanimously maintained its benchmark interbank interest rate at 6.50 percent at its August meeting. The Governing Board judged the current monetary stance adequate to navigate global geopolitical risks and ensure inflation converges to the 3.0 percent target.
Convergence deferred to late 2027
All five Governing Board members voted unanimously to maintain the overnight interbank rate target at 6.50 percent.
Headline inflation fell to 3.10 percent in the first half of July, down from 3.55 percent in early June to reach its lowest level since 2020.
Core inflation declined to 3.95 percent, returning within the variability band around the 3.0 percent target, while non-core inflation dropped to 0.21 percent.
Despite this disinflationary progress, the Board noted that inflation convergence to the 3.0 percent target is now expected in the fourth quarter of 2027.
The adjustment in the trajectory reflects sticky service inflation at 4.36 percent and lingering supply shocks.
Tech exports offset external volatility
The Mexican economy expanded 1.5 percent quarter-on-quarter in the second quarter of 2026, recovering from the previous contraction while leaving the output gap marginally negative.
External demand remained supported by non-automotive tech exports linked to artificial intelligence, which rose to nearly 25 percent of total shipments from under 5 percent in 2024.
Meanwhile, global uncertainty persisted as renewed Middle East tensions drove commodity volatility, and the Mexican peso appreciated 2.11 percent over the inter-meeting period.
Patience over premature victory
The policy pause shows necessary discipline despite headline inflation touching 3.10 percent.
Persistent service rigidity and extreme non-core relief make current disinflation flattering yet fragile.
Keeping rates at 6.50 percent remains vital until medium-term expectations truly anchor.