Mexico Government Bond 10Y

Rabobank analysts Molly Schwartz and Christian Lawrence note that Mexico's central bank, Banxico, unanimously kept the overnight policy rate at 6.50% on August 6 and continues to judge the stance as appropriate, supporting the Mexican peso carry trade.

The Bank of Mexico decided unanimously at its monetary policy meeting on the 6th to hold the policy rate at 6.50 percent. This marks the second consecutive hold, in line with market expectations. In its statement, the central bank pushed back the expected timing for inflation to converge to the 3 percent target to the fourth quarter of 2027, from its previous forecast of the second quarter of the same year. It noted that risks to the inflation outlook are tilted to the upside, amid persistently high core inflation, trade policy disruptions, and peso depreciation risks. An economist at Capital Economics said the statement was slightly more hawkish than the previous one, and that a rate hike by year-end is possible.