Banco de México (Banxico) cut its benchmark rate to 6.25% on Nov. 5 in a split decision, while raising both near-term inflation forecasts and identifying further peso losses as a risk to prices.
The Governing Board voted 3-2 to reduce the overnight interbank rate by 25 basis points from 6.50%, effective Nov. 6. That left Mexico’s rate 225 basis points above the Federal Reserve’s 4% upper target, the comparison used in FXStreet’s report on ING’s view. The gap was 237.5 basis points against the Fed range’s 3.875% midpoint. EconoTimes previously covered the peso’s decline ahead of Mexico’s rate decision.
Between the first fortnights of September and October 2026, headline inflation increased from 3.42% to 3.62%, while core inflation eased from 3.79% to 3.78%. Banxico lifted its fourth-quarter headline forecast to 3.7% from 3.5% and its core forecast to 3.7% from 3.6%. It projected headline inflation would converge with its target in the fourth quarter of 2027.
The board pointed to continuing disinflation and expected unused economic capacity to persist through its forecast period. It saw no current demand-driven pressure on prices and assessed that slack would curb the effect of exchange-rate moves on consumer prices. Still, it identified additional peso depreciation as a factor that could push inflation higher. The board said it expected to keep the rate at 6.25% for an extended period.
Banco de México’s interbank closing-equilibrium series recorded 18.5669 pesos per dollar on Nov. 4, 18.7499 on Nov. 5 and 18.6280 on Nov. 6. The peso regained some ground after weakening on the decision date, though the Nov. 6 reading remained above the Nov. 4 level.
FXStreet reported Nov. 6 that Chris Turner, ING’s Global Head of Markets and Regional Head of Research for UK & CEE, saw external risks leaving the peso vulnerable. FXStreet quoted Turner as saying, “USD/MXN pushing above 19 seems more likely than not.” In a separate assessment, BBVA Research said the balance of risks had shifted against the peso after the cut, while placing the exchange rate near its estimated fair value.
Banxico is scheduled to release minutes from the Nov. 5 meeting on Nov. 19. Its next policy announcement is set for Dec. 17.
