The Bank of Mexico’s Governing Board unanimously held the target for the overnight interbank interest rate at 7.00%, pausing its rate-cutting cycle as it assessed a less favorable inflation outlook, upward revisions to inflation forecasts, the effects of fiscal adjustments introduced at the beginning of the year, exchange-rate developments, weak economic activity and the degree of monetary restriction already in place. In implementation terms, the central bank maintained the overnight interbank rate target at 7.00%. Between November 2025 and the first fortnight of January 2026, headline inflation eased to 3.77% from 3.80%, but core inflation rose to 4.47%, prompting upward revisions to headline and core inflation projections from the first quarter of 2026 through the first quarter of 2027, with headline inflation now seen converging to the 3% target in the second quarter of 2027; headline inflation expectations for end-2026 also increased while longer-term expectations remained above target. Domestically, economic activity expanded in the fourth quarter of 2025 after contracting in the third quarter, although uncertainty and trade tensions continued to pose downside risks. Since the previous policy decision, Mexico’s government interest rates declined across maturities and the Mexican peso appreciated. Globally, the Board said world growth likely slowed further in the fourth quarter of 2025 amid persistent trade tensions, while escalating trade tensions and intensified geopol
Bank of Mexico2026-02-05
Bank of Mexico Holds Target for the Overnight Interbank Interest Rate at 7.00%
The Bank of Mexico unanimously held the target for the overnight interbank interest rate at 7.00%, pausing its rate-cutting cycle as it assessed a less favorable inflation outlook, upward revisions to headline and core inflation forecasts, fiscal adjustments, exchange-rate developments, weak activity and the degree of monetary restriction already in place. Headline inflation eased to 3.77% in the first fortnight of January 2026 from 3.80% in November 2025, while core inflation rose to 4.47%, and the Board now sees headline inflation converging to the 3% target in the second quarter of 2027.