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Banxico minutes point to longer pause after holding rates at 6.5%

Policymakers said the benchmark was appropriate amid upside inflation risks and warned that escalation in the Middle East conflict could hit global activity.

Reported · Written up by our desk · Central Banks

Bank of Mexico minutes from its August 6 meeting indicate the central bank is likely to keep policy rates on hold for some time, even as disinflation resumes, according to FXStreet.

Banxico maintained its main interest rate reference unchanged at 6.50%, and the minutes said the current level remains appropriate given an uncertain global backdrop and inflation risks that skew to the upside.

Policymakers also highlighted external risks, noting that escalation of the Middle East conflict could negatively affect global economic activity while increasing upside risks to inflation.

The minutes further said that even with GDP expansion, the output gap remains in negative territory, a sign of slack that can influence the path of future monetary policy.

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