Banxico keeps its rate at 6.50% even though inflation is decreasing

WHAT HAPPENED

Banxico kept its interest rate at 6.50% for the second consecutive meeting. Although inflation decreased from 3.55% to 3.10%, it now estimates that it will return to its target of 3% until the end of 2027.

WHY IT MATTERS

Inflation is decreasing, but Banxico fears it will take time to reach 3%. Therefore, it keeps money expensive: a basket costing $100 would increase by about $3.10 in a year. Construction, housing, automobiles, credit cards, and businesses feel the slowdown first.

AND FOR YOUR PORTFOLIO

For your wallet, mortgage loans, auto loans, credit cards, and business loans will continue to cost more for a longer time. For long-term investors, a high rate can support the peso, but it also cools consumption and company sales.