Bank of Mexico Minutes Leave Questions Over Duration of Hold

By Anthony Harrup

MEXICO CITY--Mexican central bankers agreed to leave the benchmark interest rate unchanged for a second straight time this month, although minutes of the meeting published Thursday suggested differences emerging about how long the hold might last.

The Bank of Mexico kept its overnight interest rate target at 6.5% on Aug. 6 in a unanimous decision, and reiterated its expectation of keeping the rate at that level for some time.

Two of the five board members said they considered it appropriate to keep the interest rate unchanged "on this occasion," without expressing a commitment to an extended hold. One member specified that the rate should remain unchanged for "some time," and another called for a cautious approach while maintaining "a robust monetary policy stance," according to the minutes.

Several members said that sluggish economic growth and stability in the Mexican peso were contributing to the decline in inflation.

The minutes have "a broadly neutral flavor," Goldman Sachs's chief Latin America economist Alberto Ramos said in a note. "While not explicitly or implicitly arguing in favor of additional near-term rate cuts, in our assessment the bar for a potential pivot by the dovish majority in the direction of additional easing does not seem particularly high."

Another board member questioned whether the current neutral policy stance was enough to bring inflation to the central bank's 3% target, and said the bank "should communicate clearly that the current reference rate levels will remain in place until the progress already observed in inflation is consolidated."

The possibility of higher global interest rates limits capacity for further monetary easing, the member added.

Inflation stood at 3.12% in July, with core inflation at 3.95%. The Bank of Mexico noted the recent decline in inflation, led by prices of noncore goods, but moved back the timeline for reaching the 3% target to the fourth quarter of 2027 instead of the second quarter of next year.

The minutes "show that the majority of the board sees no urgency to adjust the policy stance in the foreseeable future as it juggles slower inflation convergence in 2027 and the potential for U.S. Fed hikes, with one member even leaving the door open for cuts," Barclays analysts Gabriel Casillas and Nestor Rodriguez said in a note.

But "even if the Fed decides to hike rates in a one-off fashion without a proper hiking cycle, we believe Banxico could remain on pause given the strong peso," they added.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

August 20, 2026 14:59 ET (18:59 GMT)