Wells Fargo Economics anticipates that Mexico's June Consumer Price Index (CPI) will confirm a trend of gradual disinflation, with both headline and core inflation rates expected to ease, although services prices remain persistent [1]. Specifically, headline inflation is projected to slow to 3.75% year over year and core inflation to 4.10%, down from 3.94% and 4.19% in May, respectively, based on mid-month data [1].
At its June meeting, Banxico's Governing Board unanimously decided to maintain the Overnight Rate at 6.50%, indicating that the current policy stance is likely to remain appropriate for an extended period [1]. Policymakers also made slight adjustments to their inflation forecasts, revising the Q2-2026 headline inflation forecast lower, while the core inflation forecast was moved slightly higher [1].
Wells Fargo's base case scenario is for Banxico to keep the Overnight Rate unchanged through the end of the year and into 2027. However, the risks are seen as tilted toward a rate cut rather than a hike, particularly if economic growth underperforms and disinflation becomes more widespread in the coming quarters [1]. Banxico expects economic growth to rebound in Q2 after a contraction in Q1, followed by steady expansion, but a continued struggle in activity could prompt a rate cut by year-end [1].
CONCLUSION
Wells Fargo expects Banxico to maintain its current policy rate amid ongoing disinflation, with the possibility of a rate cut if economic growth falters and disinflation accelerates. The market is likely to interpret Banxico's stance as cautious, with attention focused on upcoming inflation and growth data for further policy signals.