Bank of Mexico Holds Policy Rate at 6.50%

The Bank of Mexico’s Governing Board unanimously held the target for the overnight interbank interest rate at 6.50% on June 25, 2026, judging that the observed exchange rate, the absence of demand-related pressures and the existing degree of monetary restriction were consistent with keeping policy unchanged even as inflation forecasts remained subject to upside risks and economic slack was expected to persist. The central bank said the Mexican economy was anticipated to expand in the second quarter of 2026 after contracting in the previous one, but significant downside risks to activity remained throughout the forecast horizon. Headline inflation fell from 4.45% in April to 3.55% in the first fortnight of June, while core inflation eased from 4.26% to 4.12%; headline inflation forecasts for the second quarter were revised down, core forecasts for the second to fourth quarters were adjusted slightly up, and headline inflation was still expected to converge to target in the second quarter of 2027. Since the previous policy decision, Mexican government bond yields declined across most maturities and the peso depreciated. Globally, the central bank said activity in the second quarter was expected to match the previous quarter’s pace, inflation in some major advanced economies rose on higher energy prices, markets were volatile, most commodity prices fell, the USD appreciated, and uncertainty linked to the Middle East conflict persisted despite negotiations suggesting a solution w