MNI Banxico Preview- Mar 2026: Risks Tilt Towards Another Hold

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Executive Summary

• Analysts are split over whether Banxico will opt to resume easing on Thursday or choose to hold rates again at 7.00%.
• Central bank rhetoric prior to the Middle East conflict had appeared to bolster the likelihood of a rate cut in March, although the latest surge in energy prices and associated hawkish repricing may tilt the risks towards the committee standing pat in March.
• Indeed, the analyst survey now tilts marginally in favour of a rate hold, although the decision looks like being a close call and could even depend on geopolitical developments in the run-up to the meeting.

The outbreak of conflict in the Middle East, and the associated surge in oil prices, has significantly complicated the outlook for Banxico ahead of Thursday’s monetary policy meeting. Prior to the developments in the Middle East, most Board members had been arguing for the possibility for a resumption of the easing cycle this month, despite the persistence of core CPI inflation. In particular, Deputy Governor Borja said in late February that the central bank had room to restart the easing cycle (after pausing at the Feb 5 MPC meeting), due to the weak domestic economy and strong currency. In her view, weak consumer spending and declining investment meant that she saw no significant inflation pressures on the near-term horizon.

However, Deputy Governor Heath has continued to strike a more hawkish tone, saying that it was too early to confirm a clear downward trajectory in core inflation, despite a slight decline recently. Heath has consistently emphasised the need for core inflation to show a clear downward trend before rate cuts are resumed. More lately, he also told MNI that it is premature to conclude that recently implemented taxes and tariff hikes will not generate second-round effects.