The Bank of Mexico kept its benchmark interest rate unchanged at 6.50% on Thursday but altered its forward guidance, removing language that had explicitly signaled an extended period of unchanged borrowing costs.
The five-member governing board voted unanimously to hold the rate.
The policy decision itself was widely expected. The change in language was more consequential.
Banxico’s previous three statements said policymakers considered it appropriate to maintain the benchmark rate at its current level going forward. That language was omitted from Thursday’s statement.
Instead, the central bank said future decisions would depend on the continuing disinflation process and factors including exchange-rate pass-through, economic slack and inflation expectations.
Banxico continues to expect headline inflation to converge toward its 3% target in the fourth quarter of 2027, but it said risks to inflation remain tilted to the upside.
Policymakers also highlighted uncertainty surrounding U.S. economic policy and geopolitical conflicts while maintaining that economic slack should persist through the forecast horizon.
The decision is particularly notable because the U.S. Federal Reserve raised its benchmark rate by 25 basis points at its September meeting. Banxico emphasized that Mexican policy does not automatically need to follow Federal Reserve moves.
That leaves Mexico in a different position from several central banks confronting renewed global inflation pressure.
For markets, the removal of the explicit prolonged-pause language widens the range of possible future policy outcomes without committing Banxico to either a rate increase or a cut.
Inflation, the peso, domestic activity and global energy prices will determine whether the next move eventually becomes tighter or easier policy.
