Key insights
- Bank of America anticipates a 25 bps rate cut by Banxico to 6.50% on May 7, citing elevated uncertainty and inflation above target. They expect the rate to remain at 6.50% through 2026. A weaker Mexican economy poses downside risks. This could lead to a stronger dollar and potentially weigh on US equities, but the impact is expected to be minimal.
Investing.com - Bank of America expects Mexico’s central bank to reduce its policy rate by 25 basis points to 6.50% on May 7, with the decision likely to pass in a 4-1 vote split.
The bank anticipates Banxico will maintain highly data-dependent forward guidance as the country faces elevated uncertainty and inflation levels above the central bank’s target.
Bank of America projects the terminal rate will remain at 6.50% for the remainder of 2026.
The firm identifies downside risks to its rate forecast stemming from a weaker Mexican economy.
Banxico’s monetary policy committee is scheduled to announce its decision on Wednesday.
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