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Mexico's Central Bank Easing Window Remains Open Despite Mixed Data, Says BBVA Research

BY MT Newswires | ECONOMIC | 08/06/25 11:05 AM EDT

11:05 AM EDT, 08/06/2025 (MT Newswires) -- Lingering challenges for the growth outlook should maintain Mexico's central bank (Banxico) confidence that monetary policy can and should continue to ease, sai BBVA Research.

BBVA Research thinks Banxico will remain confident in further services disinflation ahead and will proceed with a 25bps rate cut on Thursday.

Mexican economic activity surprised to the upside in Q2, with GDP expanding 0.7% quarter over quarter -- more than tripling Q1's pace and beating market expectations.

Headline inflation eased through the first half of July, supporting a continued, though more gradual, policy easing amid core inflation stickiness.

Most Board members are likely to maintain the view that there is still room to ease, distancing themselves from Deputy Governor Jonathan Heath's more hawkish stance, stated BBVA Research.

The Board is likely to continue adopting a strategically ambiguous forward guidance that reinforces a data-dependent approach while keeping all options on the table, it added.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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