Banxico lowers rates to 6.25% in surprise cut of 25 basis points

Market participants were taken by surprise on Thursday when the Bank of Mexico, known by its Spanish acronym Banxico, lowered interest rates by 25 basis points to 6.25%. They had anticipated that rates would be held steady at 6.50%.

This story is developing…

Economic Indicator Overview

What Does the Banxico Interest Rate Decision Mean?

At the close of each of its eight scheduled meetings a year, the Bank of Mexico (Banxico) announces its decision on interest rates. A rate increase accompanied by a hawkish assessment of the economy’s inflation outlook is typically positive for the Mexican Peso (MXN). Conversely, when Banxico takes a dovish stance on the Mexican economy and either leaves rates on hold or lowers them, the decision is generally regarded as negative for MXN.

Latest release: Thu 5 November 2026 19:00

Release frequency: At irregular intervals

Reported figure: 6.25%

Consensus estimate: 6.5%

Prior figure: 6.5%

Data source: Banxico

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Banxico: Key Questions Answered

What role does the Bank of Mexico play?

Preserving the value of the Mexican Peso (MXN) is the mission of the Bank of Mexico, the country’s central bank, also known as Banxico. The bank sets monetary policy, with the primary objective of keeping inflation low and stable within its target levels. It aims for inflation at or near 3%, the midpoint of a tolerance band between 2% and 4%.

Why does the Bank of Mexico’s monetary policy matter for the Mexican Peso?

Higher interest rates generally support the Mexican Peso (MXN), as the resulting increase in yields makes Mexico more attractive to investors. Lower rates, by contrast, tend to put pressure on MXN. Setting interest rates is Banxico’s principal monetary policy tool. When inflation exceeds its target, the bank seeks to contain it by raising rates. This increases borrowing costs for households and businesses, thereby slowing economic activity. Another key factor is the interest rate differential with the USD, or how Banxico is expected to set rates relative to the US Federal Reserve (Fed).

How many policy meetings does the Bank of Mexico hold each year?

Decisions by the US Federal Reserve (Fed) have a strong influence on Banxico’s monetary policy. Banxico holds eight meetings a year, and its decision-making committee generally convenes a week after the Fed. This timing allows it to respond to, and at times anticipate, the Federal Reserve’s monetary policy measures. After the Covid-19 pandemic, for instance, Banxico raised rates before the Fed did. It sought to reduce the risk of a sharp depreciation in the Mexican Peso (MXN) and avert capital outflows that could destabilise the country.