23/06/25

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This week is projected to be relatively subdued on the global economic front, with minimal central bank meetings scheduled. Amid ongoing geopolitical tensions, particularly around the Middle East, and persistent trade uncertainties, monetary authorities are expected to adopt cautious policies. They will likely focus on assessing economic resilience and inflation prospects in an environment marked by volatility.

The Bank of Mexico (Banxico) has recently signaled its cautious stance after lowering its benchmark interest rate by 50 basis points to 8.50%. This move was part of an ongoing easing cycle, but policymakers remain divided over maintaining accommodative monetary policy amid signs of persistent inflation. The central bank has maintained its inflation forecasts but has sharply downgraded economic growth expectations for 2025 and 2026. Gross domestic product is now expected to grow by a mere 0.1% in 2025 and 0.9% in 2026, while inflation is projected to converge toward the 3% target over the next two years.

Deputy Governor Jonathan Heath expressed reservations about further rate cuts without clear evidence of declining inflation, indicating a preference for a cautious pause pending incoming data. The upcoming rate decision on June 26 is widely expected to result in another 50 basis point reduction, aiming to support the economy amidst external headwinds. The Mexican peso has rebounded from last summer’s lows but remains vulnerable to fluctuations driven by US-Mexico trade negotiations and tariff discussions.

In Southeast Asia, the Bank of Thailand recently lowered its policy rate by 25 basis points to 1.75%, the lowest level since April 2023. The move reflects concerns over economic growth prospects amid escalating US-China trade tensions and potential tariffs. Thailand’s economy could face additional downside risks if US tariffs increase, with exports particularly vulnerable. The central bank remains cautious, holding rates steady at its upcoming meeting but closely monitoring trade developments.

Meanwhile, the Hungarian central bank is expected to maintain its rate at 6.50%, citing ongoing economic sluggishness and external uncertainties related to trade tariffs. The bank emphasizes prudent monetary policy to keep inflation expectations anchored, especially as recent inflation data suggests upward pressure. The Hungarian forint has experienced some decline recently, reflecting short-term weaknesses in response to broader geopolitical and economic concerns.