Banxico survey sees 6.50% rates through 2027, Peso near 18.40
On Tuesday, the Bank of Mexico released its October private economists survey in which most analysts revised their inflation expectations upward and see the USD/MXN exchange rate finishing the year near the psychological 18.50 mark.
The median of economists sees headline inflation at 3.88% in 2026, up from September’s 3.87%, and at 3.85% in 2027. Core inflation is seen at 3.82% by year-end, down from 3.90%, and at 3.82% in 2027.
Mexico’s economy is seen growing 1.50% in 2026, up from 1.40% a month ago, and for 2o27, analysts see growth approaching the 2% mark at 1.83%.
Regarding monetary policy, Banxico is projected to hold rates unchanged at 6.50% through the rest of 2026 and into 2027, while the USD/MXN exchange rate by the year’s end will hit 18.39 and, in 2027, will be near 18.64.
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.
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
