Banxico Survey: Private economists see lower inflation in Mexico
On Wednesday, the Bank of Mexico (Banxico) revealed that private analysts reduced their inflation expectations for the end of 2026, and updated estimates for economic growth, the exchange rate and the level of the interbank lending rate.
Headline inflation is expected at 4.20%, down from 4.35% in the previous poll, while core figures are expected to dip from 4.22% to 4.18%.
Regarding economic growth, the Gross Domestic Product (GDP) is forecast at 1.10%, unchanged from the previous poll. For 2027, the projections remained unchanged at 1.80%.
The USD/MXN exchange rate is expected to end at 17.95, up from 17.85 for this year, and for 2027 is projected to remain steady at 18.50.
For the interbank lending rate, the rest of the year and 2027 are expected to remain unchanged at 6.50%.
Banxico FAQs
The Bank of Mexico, also known as Banxico, is the country’s central bank. Its mission is to preserve the value of Mexico’s currency, the Mexican Peso (MXN), and to set the monetary policy. To this end, its main objective is to maintain low and stable inflation within target levels – at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%.
The main tool of the Banxico to guide monetary policy is by setting interest rates. When inflation is above target, the bank will attempt to tame it by raising rates, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN. The rate differential with the USD, or how the Banxico is expected to set interest rates compared with the US Federal Reserve (Fed), is a key factor.
Banxico meets eight times a year, and its monetary policy is greatly influenced by decisions of the US Federal Reserve (Fed). Therefore, the central bank’s decision-making committee usually gathers a week after the Fed. In doing so, Banxico reacts and sometimes anticipates monetary policy measures set by the Federal Reserve. For example, after the Covid-19 pandemic, before the Fed raised rates, Banxico did it first in an attempt to diminish the chances of a substantial depreciation of the Mexican Peso (MXN) and to prevent capital outflows that could destabilize the country.
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