06:30 AM EDT, 06/28/2024 (MT Newswires) -- Board members of Mexico's central bank (Banxico) voted 4-1 to hold rates steady at 11.00% on Thursday, noted BBVA Research.

The fact that the decision wasn't unanimous came as a bit of a surprise considering the recent peso (MNX) weakening and that Banxico was set to revise up its short-term headline inflation forecasts, stated BBVA Research.

BBVA Research fully agrees with the dissenting vote amid a policy stance that is overly restrictive and unwarranted considering the inflation dynamics and expectations.

Banxico continues to signal it will proceed with caution, but a less hawkish wording opens the door for a rate cut as soon as in the next meeting in early August.

BBVA Research expects that Banxico will cut the policy rate only twice this year by 25 bps each -- in August or September, and November or December.