Mexico’s central bank holds interest rate at 6.50% while inflation continues to decline

The Bank of Mexico (Banxico) board voted on Thursday to maintain the central bank’s benchmark interest rate at 6.50%, even as inflation continues to decline.

At Banxico’s fourth monetary policy meeting of 2026, all five members of the central bank’s board voted in favor of keeping the overnight interbank interest rate at 6.50%.

Meat prices were a big decliner during the first half of June, at 6.15% compared to the same period last year. (Jose Ignacio-Pompe / Unsplash)

Banxico cut its key interest rate to that level in early May, and indicated at the time that there would be no further reductions in the near future. Therefore, Thursday’s decision was no surprise.

The Bank of Mexico’s interest rate decision came a day after the national statistics agency INEGI reported that Mexico’s annual headline inflation rate was 3.55% in the first half of June, down from 3.94% across May. Banxico targets 3% inflation, with tolerance for a 2-4% range.

In a statement announcing its board’s interest rate decision, Banxico noted that “[b]etween April and the first fortnight of June 2026, headline inflation decreased from 4.45% to 3.55% due to a decline in both its core and non-core components.”

The central bank noted that “core inflation decreased from 4.26% to 4.12% during such period,” and Banxico expects that the core rate, which excludes volatile food and energy prices, will continue to decline in the second half of 2026.

However, Banxico did make slight upward adjustments to its core inflation forecasts, and is now predicting a rate of 3.5% in the final quarter of 2026, up from a previous outlook of 3.4%.

Regarding headline inflation, the central bank anticipates a rate of 3.8% in the third quarter, 3.5% in the fourth quarter, 3.2% in the first quarter of 2027 and 3% in the second quarter of next year.

Banxico said its forecasts are “subject to various risks,” including upside ones such as “disruptions due to foreign trade policies or to an inflationary impact from geopolitical conflicts”; “climate-related impacts”; and “a trend towards depreciation of the Mexican peso.”

The central bank said that its board “evaluated the inflationary outlook” and “assessed the observed levels of the exchange rate, the absence of demand-related pressures in the economy, and the level of monetary restriction implemented” before taking the decision to leave the benchmark interest rate at 6.50%.

“Looking ahead, the Governing Board estimates that it will be appropriate to maintain the reference rate at its current level. It judges that the monetary policy stance is well-suited to face the challenges posed by the macroeconomic environment, including those associated with the international context,” Banxico said in its statement.

Inflation appears set to decline for a third consecutive month in June 

The 3.55% headline reading for the first half of June indicates that inflation is likely to decline for a third consecutive month in June. The annual headline rate increased in each of January, February and March, reaching 4.59% in the third month of the year. A downward trend began in April, with inflation falling to 4.45% that month and then to 3.94% in May.

In the first half of June, inflation declined 0.11% compared to the second half of May, while the annual core rate, as Banxico noted, was 4.12%.

INEGI reported that annual inflation for processed food, beverages and tobacco was 5.13% in the first half of June, while the price of non-food goods rose 2.38%.

The cost of services increased 4.57% compared to the first half of June 2025, while fruit and vegetables were 7.77% more expensive. Meat prices declined 6.15% annually, while energy prices, including those for electricity and gasoline, increased 3.49% compared to the first half of June 2025.

Mexico News Daily 

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