Mexico Economics: Banxico Preview: Keeping rates and tone unchanged

Research evidence excerpt

Mexico Economics: Banxico Preview: Keeping rates and tone unchanged

Idea

June 22, 2026 08:00 AM GMT

Morgan Stanley C.T.V.M. S.A.MMexico Economics | Latin America Fernando D Sedano

Chief LatAm Ex-Brazil Economist

Banxico Preview: Keeping rates Fernando.Sedano@morganstanley.comMorgan Stanley & Co. LLC +55 11 3048-6605

Nicolas Eterovic

Economistand tone unchanged Nicolas.Eterovic@morganstanley.com +1 212 761-1245

Morgan Stanley C.T.V.M. S.A.

Julia Lobato Barbosa

Economist

Our call: We expect Banxico to keep rates on hold at the June 25 meeting. Julia.Lobato.Barbosa@morganstanley.com +55 11 3048-6016

Rationale for our call: The minutes of the May 7 meeting struck a cautious hold-like

tone, confirming that the Board sees the easing cycle as effectively finished for now,

with the latest 25bp cut framed as the final “normalization” move before a

prolonged pause. Policymakers emphasized that the current level of the policy rate

is appropriate to face the current inflation and external backdrop. The majority was

comfortable delivering one last cut in May, supported by weaker-than-expected

activity, widening slack conditions, peso appreciation and the lagged effects from

the restrictive stance held for a prolonged period. While most of these arguments

remain in place – especially weak growth and strong MXN ( Exhibit 1 Exhibit 1 ) –

inflationary risks look more relevant now, given persistent services inflation,

elevated external uncertainty, and climate risks. In this context, we think Banxico will

remain in a pause-and-monitor stance, waiting for more evidence that recent shocks

are fading and that core inflation continues to moderate before considering any

additional easing.

Consensus expectations: Economist consensus points to an on-hold decision, while