Mexico's central bank (Banxico) on Thursday held its target interest rate at 6.5pc, its lowest level in more than four years, and signaled support for keeping rates unchanged through its outlook horizon as inflation slows.
The unanimous decision to hold rates unchanged was the first since Banxico cut rates to 6.5pc on 7 May. The bank reduced the benchmark rate 450 basis points over 18 half- and quarter- point rate cuts made from a cyclical high of 11.25pc in March 2024.
"The document confirmed the neutral stance by the central bank," said Mexican bank Banorte, as such, the bank affirmed its "call that the reference rate will remain unchanged at 6.50pc in the remainder of 2026 and throughout 2027."
The central bank made minimal changes to its statement, retaining forward guidance that underscores a neutral policy stance.
"Looking ahead, the governing board believes it will be appropriate to maintain the reference rate at its current level," bank governors said.
Banxico noted that headline inflation slowed to 3.55pc in mid-June from 4.45pc in April, with both core and non-core inflation easing.
Banxico kept its forecast for both headline and core inflation to converge to its 3pc target in the second quarter of 2027.
Banxico also toned down its discussion of risks from the US-Iran conflict, saying "recent negotiations suggest a solution is underway."
The bank made only minor revisions to its inflation forecasts, lifting its headline estimate for the current quarter to 4.1pc from 4pc and making small upward adjustments to core inflation forecasts for the final three quarters of 2026.
The board said inflation risks remain skewed to the upside. Mexican bank Banorte noted "a slight rearrangement" of those risks, highlighting the greater weight given to climate-related impacts, consistent with the formation of El Nino.
