6.50% rates through 2027, Peso near 18.40: Banxico survey outlook

USD/MXN is expected to end the year near the psychological 18.50 level. Released on Tuesday, the Bank of Mexico’s October survey of private economists showed that most analysts had raised their inflation forecasts.

For 2026, the median headline inflation forecast edged up to 3.88% from September’s 3.87%, while the 2027 projection stands at 3.85%. Economists expect core inflation to finish the year at 3.82%, compared with 3.90% previously, and to reach 3.82% in 2027.

The growth forecast for Mexico’s economy in 2026 rose to 1.50% from 1.40% a month earlier. For 2027, analysts project growth of 1.83%, approaching the 2% level.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Banxico is expected to leave interest rates at 6.50% for the remainder of 2026 and into 2027. Forecasts put USD/MXN at 18.39 by year-end and close to 18.64 in 2027.

Banxico: Key Questions

Bank of Mexico: What Is Its Role?

Known as Banxico, the Bank of Mexico serves as Mexico’s central bank. It sets monetary policy and works to safeguard the value of the national currency, the Mexican Peso (MXN). Its primary goal is therefore to keep inflation low and stable within its target range, at or near 3%. That target is the midpoint of a tolerance band running from 2% to 4%.

Mexican Peso: How Does Banxico Policy Affect It?

Interest rates are Banxico’s principal monetary policy tool. To curb above-target inflation, the bank raises rates, increasing borrowing costs for households and businesses and cooling economic activity. By lifting yields and making Mexico more attractive to investors, higher rates generally support the Mexican Peso (MXN). Lower rates, by contrast, tend to weaken MXN. A key consideration is the interest rate differential with the USD: how Banxico is expected to set rates relative to the US Federal Reserve (Fed).

Bank of Mexico: How Frequent Are Its Meetings?

With eight meetings each year, Banxico typically convenes its decision-making committee a week after the US Federal Reserve (Fed), whose decisions strongly influence Mexican monetary policy. This timing allows Banxico to respond to Federal Reserve measures and, at times, anticipate them. Following the Covid-19 pandemic, for instance, Banxico raised rates before the Fed did. The aim was to reduce the risk of a sharp depreciation in the Mexican Peso (MXN) and avert capital outflows that could destabilise the country.