Mexico: Banxico extended hold stance – Societe Generale

Societe Generale’s Dev Ashish reports that Banxico left its policy rate at 6.50%, signalling an extended pause as inflation hovers near target and real rates sit close to neutral. The bank now sees inflation converging to target in 4Q27, while external risks from Oil prices and a potentially hawkish Federal Reserve argue against further easing, keeping Mexican rates on hold for an extended period.

Banxico signals prolonged neutral stance

"Banxico kept the policy rate unchanged at 6.50% and reiterated guidance favouring an extended pause."

"Middle East-driven oil price risks and a potentially hawkish Fed reduce the scope for further policy easing."

"We continue to expect Banxico to keep rates on hold for an extended period."

"As widely expected, the Bank of Mexico kept its policy rate unchanged at 6.50%, with the current growth-inflation mix and external backdrop justifying a policy stance that is neither overtly accommodative nor restrictive."

"Overall, the August decision strengthens the case that the easing cycle has ended."