Banxico considered the adjustments to inflation forecasts and the need to continue evaluating the impact of the fiscal changes implemented at the beginning of the year, as well as the behavior of the exchange rate, the weakness that economic activity has shown and the degree of monetary restriction that has been implemented.
The pause rate cuts occur after 12 consecutive cuts to the rate, which began in June 2024, when the rate was 11%. The last cut was recorded last December 18 when it stood at 7% .
The Citi Mexico Expectations Survey showed that the market expects Banxico to make two more adjustments to the interest rate and it closes at 6.5%, although there are institutions, such as Valmex, that expect four more adjustments, so the rate would close at 6%.
Regarding inflation, Banxico adjusted its forecasts and expects that it will converge to the goal of 3% in the second quarter of 2027 and expects that in the last quarter of this year, inflation will be 3.5%.
In the first half of January, general inflation rose to 3.77% due to the entry into force of increases to the IEPS for sugary drinks and tobacco.
Experts have pointed out that the fiscal shocks at the beginning of the year will have a one-time effect on inflation and are expected not to significantly alter the medium-term trajectory, although Banamex has warned of a slight rebound in inflation during the summer, due to the effects of the World Cup.
It is expected that between June and July, demand for services such as hotels as well as food services will impact inflation, although these will also have a limited and reversible effect once the sporting event ends.
