Banco de México held its overnight interbank target rate at 6.50% at its August meeting, the second consecutive hold, the central bank said in its policy statement on 6 August 2026. A Reuters poll published on 4 August had shown analysts expected the rate to be held. The Governing Board also pushed back the expected timing of headline inflation's return to the 3% target.
End-2026 forecasts for both headline and core inflation were left unchanged at 3.5%, above the midpoint of the tolerance band around the 3% target. The board said headline and core inflation are still expected to decline over the forecast horizon, albeit more gradually than previously anticipated.
SECOND CONSECUTIVE PAUSE
The hold follows 25 basis point cuts in March and May 2026 and an unchanged decision in June. The board said it assessed the observed levels of the exchange rate, the absence of demand pressures in the economy and the degree of monetary restriction already implemented.
The decision was unanimous, with all members of the Governing Board present.
Looking ahead, the Governing Board said it considers it appropriate to keep the reference rate at its current level, judging the monetary stance adequate to face the challenges of the macroeconomic environment.
INFLATION CONVERGENCE PUSHED BACK
The statement acknowledged that headline inflation's convergence to target has been delayed, even as the numerical end-2026 forecast was held at 3.5%. That combination reflects a slower expected decline in 2027: the board raised its headline and core forecasts for the first three quarters of 2027 and now sees headline inflation converging to target in the fourth quarter of 2027, while leaving its end-2026 projection unchanged.
The board said the balance of risks to the inflation trajectory remains biased to the upside, citing among upside risks the persistence of core inflation, trade-policy disruptions or an inflationary impact from geopolitical conflicts, weather effects, cost pressures and a tendency for the peso to depreciate.
Between the first half of June and the first half of July, headline inflation fell from 3.55% to 3.10% and core inflation from 4.12% to 3.95%, the statement noted. The statement was published on the central bank's website.