Mexico MPC Minutes Analysis

Banxico's May meeting minutes reveal a split 3-2 decision to cut the policy rate to 6.50%, with the majority signaling an end to cuts while emphasizing weak 1Q26 growth.

Key Takeaways

• 1.The Bank of Mexico (Banxico) cut its policy rate by 25bp to 6.50% in a split 3-2 decision, signaling the end of the normalization cycle for the majority.
• 2.A dovish majority on the board is prioritizing weak economic growth and expanding slack over high core inflation and deteriorating expectations.
• 3.Mexico's 1Q26 GDP contracted by 0.8% QoQ, which was deeper than expected and supports the dovish stance despite inflationary pressures.

Table of Contents

• DETAILS:
• Tight Mex-US Interest Rate Differential
• Real Ex-Ante Mexico Policy Interest Rate at Midpoint of the Neutral Range
• Disclosure Appendix

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