Mexico city at goldenhour

Mexico Interest Rate

Mexico Interest Rate

Banxico Target Rate in Mexico

Mexico's central bank policy rates from 2013 to 2022 varied in response to economic conditions. Initially, rates were increased to control inflation, but were cut to stimulate growth during economic slowdowns, particularly during the COVID-19 pandemic. Post-pandemic, the focus shifted to controlling rising inflation, leading to increased rates.

The Banxico Target Rate ended 2022 at 10.50%, higher than the 5.50% end-2021 value and significantly above the rate of 3.50% a decade earlier. For reference, the average policy rate in Latin America stood at 18.90% at the end of 2022. For more interest rate information, visit our dedicated page.

Mexico Interest Rate Chart

Note: This chart displays Policy Interest Rate (%) for Mexico from 2014 to 2023.
Source: Central Bank of Mexico.

Mexico Interest Rate Data

2018 2019 2020 2021 2022
Banxico Target Rate (%, eop) 8.25 7.25 4.25 5.50 10.50
TIIE 28 Days Rate (%, eop) 8.60 7.56 4.48 5.72 10.76
10-Year Bond Yield (%, eop) 8.69 6.86 5.47 7.55 9.04

Central Bank keeps rates stable in February

At its meeting on 8 February, the Governing Board of the Bank of Mexico (Banxico) left the overnight interbank interest rate target at 11.25%, where it has been since March 2023. This came after 725 basis points of hikes from early 2021 to March 2023.

Cutting rates was premature given that headline and core inflation remain above the upper bound of the Central Bank’s 2.0–4.0% target range, and that both the market’s and the Bank’s own short-term inflation forecasts were revised upwards. In contrast, hiking further was not warranted given that interest rates are already at historically high levels and that the Bank still sees inflation returning to the target range in H2 this year.

Banxico’s forward guidance became more dovish, with the Bank floating the possibility of rate cuts at upcoming meetings. Our Consensus is for over 200 basis points of rate cuts this year, though there is a 250 basis-point discrepancy among panelists over the end-2024 rate.

On the outlook, Itaú Unibanco analysts said: “In our view, the statement is consistent with our call of the easing cycle beginning with a 25-bp cut in March, assuming that core inflation continues behaving as expected by the central bank.  While further pressures in non-core inflation are a risk to our call, board members seem to be downplaying it. We expect a gradual easing cycle given lingering risk to inflation, with our end of year policy rate forecast at 9.50%.” Goldman Sachs’ Alberto Ramos was more dovish: “The door remains open for the first rate cut to take place in March or May. […] At this juncture we continue to expect the first rate cut at March 2024 (-25bp) and we expect the policy rate to reach 9.00% by end-2024.”

Consensus Forecasts and Projections for the next ten years

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Mexican interest rate projections for the next ten years from a panel of 36 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Mexican interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Mexican interest rate projections.

Want to get access to the full dataset of Mexican interest rate forecasts? Send an email to info@focus-economics.com.

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