Mexico: Banxico minutes – Digging a bit deeper

Research evidence excerpt

Mexico: Banxico minutes – Digging a bit deeper

AmericaBanco J.P.Morgan, S.A., Institución de Banca Múltiple, J.P.Morgan Grupo FinancieroLatin Economic Research J P M O R G A N 09 July 2026Gabriel Lozano

(52-55) 5540-9558

gabriel.lozano@jpmorgan.com

behaved currency continues to figure importantly in the discussions.

DG Galia Borja was balanced in her remarks, as usual, but she also welcomed the recent

inflation dynamics (emphasizing that some metrics of consumer prices are now back at pre-

pandemic levels) and suggested that economic slack and lower wages could support lower

services inflation. She was careful when describing inflation expectations and the need to

remain cautious to strengthen the anchoring of expectations and to prevent second-order

effects.

On the hawkish front, DG Jonathan Heath indicated that the discussion is tilting towards

whether or not to bring the ex-ante policy rate to "easy" territory (i.e. below 1.8%), and also

underpinned the increased relevance of the Fed factor considering the recent bias of

influential central banks across the world and the FOMC’s June statement. He was emphatic

in saying that benign non-core inflation explains most of the recent corrections in inflation

dynamics and that this suggests caution in the projections ahead. Most members mentioned

this.

All in, the board has now returned to its outright dovish guidance, suggesting that more cuts

cannot be disregarded. We believe that conditions do not yet open a new door for cuts, given

the renewed tensions in the Middle East, the incoming pressures from the El Niño

phenomenon, and the lack of a clear understanding of the new Fed rhetoric, but that if

conditions are met, the board will seize the moment. They will probably continue to