Banxico holds its rate at 6.50%: what it means for your loans and savings in Cancún

The Bank of Mexico (Banxico) released on Thursday, August 20, the minutes of its August 6 monetary policy meeting, in which its Board of Governors voted unanimously to keep the benchmark interest rate at 6.50%. It was the second consecutive hold, a pause within the rate-cutting cycle the central bank ran for much of the year.

The Board based the decision on the recent behavior of inflation, economic activity, and the international environment. For context, annual headline inflation stood at 3.12% in July —within Banxico's target range of 3% plus or minus one percentage point— although the core component, which tracks the underlying trend in prices, remained higher at 3.95%, according to INEGI.

What it means for your money in Cancún: the benchmark rate is the basis for the cost of credit and the return on savings across the country. By staying at 6.50%, rates on credit cards, personal loans, car loans, and mortgages will not come down for now. On the other hand, savings instruments tied to this rate —such as CETES and bank promissory notes— keep offering relatively high returns, and a prolonged pause helps sustain them longer.

What you can do:

• If you carry credit-card debt, make it a priority: it is among the most expensive and will not get cheaper soon. Pay more than the minimum whenever you can.
• If you want to save, compare options: through cetesdirecto you can invest from 100 pesos with no fee; check the net rate after income tax and compare it with your bank's promissory note.
• Before taking out a mortgage or car loan, compare the CAT (Total Annual Cost) across several institutions; it is the figure that best reflects what you will actually pay.

The next monetary policy decision and fresh inflation data will be the signals that show whether the cost of money starts falling again or the pause continues.