Mexico's central bank announced on Thursday that it will keep its benchmark interest rate at 6.50%, a decision reached unanimously by the board and in line with market expectations.
In conjunction with the rate decision, Banxico left its inflation projections unchanged from earlier forecasts. The central bank expects headline inflation to be 3.5% in the fourth quarter of 2026 and to ease to 3.0% by the fourth quarter of 2027. Projections for core inflation mirror those figures, with core inflation also projected at 3.5% in Q4 2026 and 3.0% in Q4 2027.
Banxico reiterated that it anticipates headline inflation to converge to its target in the fourth quarter of 2027. At the same time, the central bank flagged that risks to the inflation trajectory over the projection period remain tilted to the upside.
On the policy stance, the board signaled that maintaining the policy rate at its current level is considered appropriate going forward. The unanimous nature of the decision was explicitly noted, reflecting full agreement among board members at this meeting.
Context and implications
The bank's decision preserves the status quo on the policy rate and keeps its official inflation outlook intact. The central bank's expectation that headline inflation will converge to the target by Q4 2027 was reiterated, while the institution also emphasized the presence of upside risks to that path.
What the statement contained
- The benchmark interest rate was retained at 6.50% in a unanimous board decision.
- Headline inflation forecasts were left unchanged: 3.5% for Q4 2026 and 3.0% for Q4 2027.
- Core inflation projections were also unchanged at 3.5% for Q4 2026 and 3.0% for Q4 2027.
- Banxico expects headline inflation to converge to its target in Q4 2027, but noted upside risks to the inflation trajectory within the forecast horizon.
- The board indicated it views keeping the rate at its current level as appropriate going forward.
Summary
Banxico maintained its policy rate at 6.50% on Thursday in a unanimous decision, holding both headline and core inflation forecasts steady and projecting convergence to the inflation target by the fourth quarter of 2027. The central bank highlighted upside risks to the inflation path and signaled that the current policy rate is appropriate for now.