Citi Mexico released its September “Expectations Survey,” in which most private economists expect the Bank of Mexico (Banxico) to hold rates unchanged, while the exchange rate is forecast to end below the 18.00 threshold by the end of 2026.
The poll showed that most economists expect the main reference rate to be at 6.50% at least until the end of 2027, with the range fluctuating between 6.25% and 6.75%. The USD/MXN is expected to end at 17.50 by the end of the current year, and for the end of 2027, the consensus see the exotic pair at 18.07, down from 18.24.
Regarding inflation, it is expected to finish at 4% for 2026, while the core component is expected to end at 4% as well, according to the survey.
Mexico’s Gross Domestic Product (GDP) is forecast to end 2026 at 1.3%, up from 1.2% YoY, according to the survey. For 2027, respondents expect the economy to grow by 1.8%, as in the previous survey, with estimates ranging from 1.0% to 2.3%.
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.
