- Decision
- Maintain
- Rate change
- 0 bps
- Policy rate after decision
- 6.5%
The Bank of Mexico’s Governing Board unanimously held the overnight interbank interest rate target at 6.50%, citing continued disinflation, expected economic slack and an absence of demand pressures, while maintaining an upward bias in the inflation risk balance. Over the past year, the central bank cut the rate in 25-basis-point steps from 7.50% in September 2025 to 6.50% in May 2026 and has held it since. Headline inflation rose to 3.42% in the first half of September, while core inflation declined to 3.79%, and headline inflation is still projected to converge to the 3% target in the fourth quarter of 2027. Economic growth was estimated to have moderated in the third quarter, with downside risks persisting, while Mexican government yields rose across most maturities and the peso showed some volatility. Globally, growth slowed slightly, advanced-economy inflation was pressured by higher energy prices, commodity prices increased and financial markets remained volatile amid uncertainty over the Middle East conflict. The Governing Board will assess disinflation, exchange-rate pass-through, slack and inflation expectations, and said domestic monetary policy need not respond mechanically to anticipated US rate adjustments.
Rate evolution
The Bank of Mexico lowered the policy rate by 100 basis points from 8.00% in June 2025 to 7.00% in December 2025, moving from a 50 basis point cut to a run of 25 basis point reductions, before pausing in February 2026, resuming easing with a 25 basis point cut to 6.75% on March 26, effective March 27, and maintaining the target for the overnight interbank interest rate at 6.50% on June 25, August 6 and September 24. The Governing Board eased as economic activity weakened and trade tensions posed downside risks, while mixed inflation dynamics and persistent core inflation led it to revise forecasts and, in August, delay expected convergence to target to the fourth quarter of 2027, a timeframe it retained in September.
On February 5, the Board left the target at 7.00%, judging it appropriate to pause the rate-cutting cycle while assessing the revised inflation outlook, fiscal adjustments introduced at the beginning of the year, exchange rate developments, weak activity and the degree of monetary restriction, before resuming rate cuts on March 26 after considering observed exchange rate levels, weak activity and the degree of monetary restriction, even as headline inflation rose to 4.63% in the first fortnight of March from 3.77% in the first fortnight of January, core inflation remained at 4.46%, and risks to the inflation path stayed biased to the upside. On June 25, the Board unanimously maintained the target at 6.50% after assessing exchange rate levels, the absence of demand-related pressures and the degree of monetary restriction, while headline and core inflation had declined to 3.55% and 4.12%, respectively, in the first fortnight of June and the economy was expected to expand in the second quarter after contracting in the first. On August 6, it unanimously held the target at 6.50% and signalled that maintaining the rate at its current level would be appropriate, noting that the economy had rebounded in the second quarter and slack was expected to persist, while headline and core inflation fell to 3.10% and 3.95%, respectively, in the first fortnight of July. On September 24, the Board again unanimously held the target at 6.50% after assessing exchange rate behavior, the different stages of the economic cycles in Mexico and the United States, the absence of demand pressures in Mexico and the degree of monetary restriction, as third-quarter activity appeared to moderate and slack was expected to persist, while headline inflation rose to 3.42% in the first fortnight of September due to higher non-core inflation and core inflation declined to 3.79%.