Banxico Minutes: Adequate stance given services persistence

Research evidence excerpt

Banxico Minutes: Adequate stance given services persistence

Idea

July 9, 2026 04:14 PM GMT

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

Chief LatAm Ex-Brazil Economist

Banxico Minutes: Adequate Fernando.Sedano@morganstanley.comJulia Lobato Barbosa +55 11 3048-6605

Economist

Julia.Lobato.Barbosa@morganstanley.com +55 11 3048-6016

stance given services Morgan Stanley & Co. LLC

Nicolas Eterovic

Economistpersistence Nicolas.Eterovic@morganstanley.com +1 212 761-1245

The minutes of the June 25 meeting - when authorities kept rates at 6.50% -

came in broadly in line with the statement, reinforcing our on-hold view. The

tone remains clearly pause-and-monitor, with the Board judging that the current

policy stance is appropriate to face the inflation and external backdrop, while

maintaining the message that the policy rate should remain at its current level for

now.

Despite the unanimous decision, differences across Board members persist: The

most hawkish view continued to emphasize the need for patience, persistent

services inflation, some deterioration in inflation expectations, and that the neutral

stance was reached prematurely, arguing that any further easing would require

compelling evidence of sustained inflation convergence. Other cautious views also

stressed the importance of maintaining a robust stance to prevent second-round

effects and preserve the anchoring of expectations, especially amid still-elevated

risks.

At the same time, several members highlighted factors supporting the

disinflation process: weak domestic demand, a negative output gap, the lagged

effects from the restrictive stance held for a prolonged period, and the resilience of

the MXN. Members also reiterated that recent inflation shocks remain mostly