Overview

• Minutes from the June 26 meeting show Banxico will scale back rate cuts from 50 basis points to 25 basis points in upcoming sessions.
• Board members noted headline inflation climbed from 3.93% in April to 4.51% by mid-June, driven by increases in both underlying and non-underlying components.
• Subgovernor Jonathan Heath Constable cast the lone dissenting vote, warning that large cuts risk signaling complacency and eroding the bank’s credibility.
• Banxico projected that weak or slightly contracting economic activity this year will support its gradual disinflation process.
• Analysts at Banamex now expect three consecutive 25bp reductions in August, September and November, bringing the benchmark rate to 7.25% by year-end.