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Banxico holds its overnight rate at 6.50% while softening guidance

Rabobank said Banxico’s statement changes reduce how mechanically Mexican policy is linked to expected Federal Reserve moves, even as upside risks for a future hike remain.

Reported · Written up by our desk · Central Banks

Banxico kept its overnight rate at 6.50%, but softened its forward guidance, according to FXStreet’s account of Rabobank analysts Molly Schwartz and Christian Lawrence.

Rabobank said the shift effectively decouples Mexican policy from expected Federal Reserve moves, while inflation forecasts were broadly unchanged, with core CPI nudged higher and risks still skewed upward.

FXStreet reported Rabobank’s expectation that Banxico will hold at 6.50%, but that the balance of risks favors a future hike, with the central bank continuing to assess policy through disinflation progress and factors including exchange rate pass-through and inflation expectations.

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