Key facts
- The Bank of Mexico held its benchmark interest rate steady at 6.50% for the third consecutive meeting.
- Policymakers removed language from previous statements that indicated borrowing costs would remain at current levels.
- Future policy decisions will consider the ongoing disinflation process, exchange rate pass-through, economic slack, and inflation expectations.
- Banxico maintained its expectation that headline inflation will converge to its 3% target in the fourth quarter of 2027.
- The balance of risks for inflation remains biased to the upside.
- Uncertainty stems from US economic policy and geopolitical conflicts.
The Bank of Mexico maintained its benchmark interest rate at 6.50% for the third consecutive meeting, a decision that met market expectations. However, the central bank's communication signaled a shift in its forward guidance, removing language that previously suggested borrowing costs would remain at current levels.
In its updated monetary policy statement, Banxico indicated that future decisions would be data-dependent, considering factors such as the ongoing disinflation process, the behavior of its determinants including exchange rate pass-through to consumer prices, economic slack, and inflation expectations. This move away from explicit forward guidance suggests a greater emphasis on flexibility and responsiveness to evolving economic conditions.
The bank reiterated its forecast that headline inflation will reach its 3% target in the fourth quarter of 2027, but noted that the balance of risks for inflation remains tilted to the upside. Uncertainty stemming from US economic policy and prolonged geopolitical conflicts were cited as key external risks. Meanwhile, economic slack is expected to persist, with downside risks to economic activity continuing.
Core inflation, which excludes volatile items like food and energy, was reported at 3.79% for the first half of September 2026, continuing a slow decline but remaining above the headline figure. The central bank nudged its forecast for core inflation slightly upward, reflecting the stickiness of underlying price pressures. The bank also noted that Mexican monetary policy does not automatically need to follow the US Federal Reserve's moves.