Mexico

Research evidence excerpt

Gabriel Lozano (52-55) 5540-9558

Banco J.P.Morgan, S.A., Institución de Banca Múltiple, J.P.Morgan Grupo Financiero

Santiago Homberg Saury (52-55) 5540-9499

J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero

Mexico

Latin America Economic Research

JPMORGAN

07 August 2026

Figure 1: Mexico and US real differential

9

Banxico: Holds rate at 6.5% in a neutral statement

Inflation July: Holds close to target at 3.12%oya

May domestic demand delivers a positive surprise

July survey data showed mixed dynamics

This week was marked by myriad data releases, with the spotlight on Banxico. The board delivered a much-anticipated onhold decision in a statement that balanced an increased

emphasis on core inflation with continued concerns about

economic slack. Of note, the Fed factor did not figure notably,

an important message in itself. In our view, this implies Banxico is playing a careful balancing act that will result in an onhold stance at 6.5% for the foreseeable future. While inflation

stood at near-target levels in July, it is expected to gradually

increase towards 3.9% by-year-end, and on the growth front,

data remains mixed and consistent with below-potential

growth. Adding to the mixed-data dynamics, next week, we

eye industrial production for June at 0.7%samr.

Banxico reaffirms its on-hold stance

While a unanimous decision to keep rates on hold was broadly expected, the hawkish hints on inflation persistence and

upgrading core inflation within the list of concerns were

probably the highlights of the statement, in which the forward

guidance was little changed and the Fed factor did not figure

importantly. The implicit message is one that intends to

reflect a cautious and vigilant board that is still fine-tuning

the neutral narrative in the early stages of this policy stage.

We still expect Banxico to remain on hold even if the Fed

hikes in December. With the balance of risks to growth and

inflation broadly unchanged, the Bank is well positioned to

stick to 6.5% for the foreseeable future. On the one hand, if

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