Banxico holds overnight interbank rate at 6.50 percent
Banco de México's Governing Board decided unanimously to maintain the target for the overnight interbank interest rate at 6.50 percent. The central bank reaffirms its commitment to its primary mandate of low and stable inflation.
Inflation path to target
Between April and the first fortnight of June 2026, Mexico's headline inflation decreased from 4.45 percent to 3.55 percent, driven by declines in both its core and non-core components.
Core inflation also saw a reduction, moving from 4.26 percent to 4.12 percent during the same period.
Despite these recent declines, headline inflation expectations for the end of 2026 only decreased marginally, while those for longer terms remained relatively stable at levels above the central bank's target.
The Governing Board's decision was informed by an evaluation of the inflationary outlook, including observed exchange rate levels, the absence of demand-related pressures in the economy, and the existing level of monetary restriction.
The Board, with all its members present, unanimously decided to maintain the target for the overnight interbank interest rate at 6.50 percent, emphasizing its commitment to consolidating an environment of low and stable inflation.
Global headwinds, domestic shifts
Global economic activity is estimated to have grown at a similar pace in the second quarter of 2026 as in the previous quarter.
Major advanced economies saw continued increases in headline inflation, mainly due to rising energy prices, while core inflation varied across countries.
The Federal Reserve kept its target range for the federal funds rate unchanged.
International financial markets exhibited volatility, most commodity prices decreased, and the US dollar appreciated.
US government interest rates increased for most terms, and uncertainty from the Middle East conflict persists.
Domestically, Mexico's government interest rates decreased for most terms, and the Mexican peso depreciated.
The economy is anticipated to expand in Q2 2026 after a Q1 contraction, with economic slack expected to continue.
Significant downward risks to economic activity persist.
Cautious hold amid mixed signals
Banxico's decision to hold rates reflects a cautious balancing act, acknowledging recent inflation declines while remaining vigilant against persistent core pressures and external uncertainties.
The unanimous vote underscores a consensus that the current monetary policy stance is appropriate given the mixed signals from both the global and domestic macroeconomic environments.
This posture prioritizes the consolidation of low and stable inflation, even as the path to the target remains subject to geopolitical and exchange rate risks.