Mexico’s central bank signals prolonged rate pause as inflation concerns persist despite easing price pressures.
The Bank of Mexico indicated it will maintain its benchmark interest rate at 6.5% for an extended period, citing persistent inflation risks and global uncertainty. The decision aligns with unanimous expectations following the August 6 meeting, where policymakers deemed the current rate appropriate despite disinflation progress.
Minutes revealed concerns over the Middle East conflict’s potential to disrupt global economic activity and drive inflation higher. While Mexico’s GDP expanded in the latest quarter, most board members noted the output gap remains negative, suggesting slack in the economy.
Banxico also highlighted upside risks to inflation from external shocks, reinforcing its cautious stance. One member suggested growth in 2026 could exceed the bank’s 1.1% forecast, though no immediate policy shift was signaled.