Banxico’s Minutes focus on high inflation in the services sector

• Deputy Governor Omar Mejía Castelazo voted for a rate cut at the June 27 meeting.
• Most members of the Governing Board highlighted the process of disinflation at a global level.
• The 3% inflation target is expected to converge in the fourth quarter of 2025.

Banxico’s Governing Board members agree on a downward inflationary trend in the merchandise sector, although service inflation continues to show no clear downward trend.

Mexican Peso Hits Five-Week Highs After Banxico Minutes Released

Most members noted that headline inflation has been declining in most advanced economies, reflecting lower food prices.

One member noted that central banks in advanced economies have emphasized a greater reliance on data for their future monetary policy decisions. All members highlighted the Federal Reserve’s economic projections, lowering the number of cuts expected for the current year.

Some members noted that overall inflation in Mexico has been trending upward since March. One member commented on the scant progress in disinflation over the past half year.

Deputy Governor Omar Mejía Castelazo voted in favor of reducing the target for the Interbank Interest Rate on a daily basis by 25 basis points to a level of 10.75%, inviting a deep reflection on the appropriate level of restriction in the current context, without over-emphasizing the evolution of non-core inflation, on which monetary policy has little impact.

Mexican Peso Reaction

The USD/MXN has reached a first support located at 17.63, given by the 50% Fibonacci retracement. The next support is located at 17.91, the low of May 31, in convergence with the 23.6% Fibonacci retracement. The closest resistance is at 18.59, the high of June 28.

USD/MXN Daily Chart