Mexico weekly: Constructing a solid June IP print

Research evidence excerpt

J P M O R G A N

Latin America Economic Research

07 August 2026

Mexico weekly

Constructing a solid June IP print

See our full research on Economics: Mexico

EM, Economics Research

Gabriel Lozano

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 on-hold 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 on-hold 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-yearend, and on the growth front, data remains mixed and consistent with belowpotential 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 the board

had any intention of hinting at a resumption of possible cuts, this week’s statement

was an unbeatable opportunity, considering that headline inflation is near its target

at 3.1% and recent economic activity data has been neutral, and especially

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