The Central Bank of Mexico published minutes showing that its Governing Board unanimously maintained the overnight interbank interest rate target at 6.50%. The decision balanced continued core disinflation, economic slack and an appreciating peso against persistent services inflation and upside risks from geopolitical conflicts, energy prices and trade policy. Members agreed that Mexico’s different economic cycle means monetary policy should not respond mechanically to expected changes in the U.S. federal funds rate. Headline inflation rose from 3.10% in the first half of July to 3.42% in the first half of September because of higher noncore inflation, while core inflation declined from 3.95% to 3.79%. Services inflation remained persistent at 4.33%, and the board retained an upward bias in the balance of inflation risks despite continuing to forecast convergence to the 3% target in 2027. The 2026 growth forecast was raised to 1.5% from 1.1% following stronger recent activity, although economic slack is expected to persist and risks to growth remain tilted downward. Several members left open the possibility of a targeted rate reduction if inflation continues to decline and financial markets remain orderly. Another argued that the current rate should be maintained for a prolonged period and raised the possibility of discussing closer alignment with the Federal Reserve’s tightening cycle if Mexican inflation does not converge sustainably toward 3%. Future decisions will be taken meeting by meeting based on inflation, economic slack, exchange rate pass-through and expectations.
Central Bank of Mexico publishes minutes showing unanimous 6.50% rate hold and debate over future cuts
The Central Bank of Mexico’s minutes show a unanimous decision to hold the overnight rate at 6.50%, with core disinflation and economic slack offset by persistent services inflation and geopolitical risks. Several members remained open to a future rate cut if conditions improve, while another favored a prolonged hold. The board stressed that policy need not follow Federal Reserve rate changes mechanically.