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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 2023 to 2015.
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 maintains rates in May

At its meeting on 9 May, the Central Bank decided to keep the target for the overnight interbank interest rate unchanged at 11.00%, following a rate cut at the prior meeting in March.

The decision to pause rate cuts was driven by a rise in inflation since the prior meeting, as well as upward revisions to the Bank’s inflation forecasts for the remainder of this year. The upward revisions were due to more-persistent-than-expected services price pressures, with inflation now only expected to return to the 2.0–4.0% target range at the end of 2024.

The Central Bank did not provide clear guidance on future interest rate movements. The Consensus among our panelists is for rate cuts to resume later this year, though any upward inflation surprises or delay to the Federal Reserve’s monetary policy easing could push back rate cuts in Mexico.

Giving their take on the outlook, Goldman Sachs analysts said: “At this juncture we forecast a moderate 25bp rate cut at the June meeting, unless the data set is clearly unfriendly, and the policy rate to reach 9.50% by end-2024, with risks skewed to the upside.” On inflation forecasts, Scotiabank analysts said: “Despite constant upward revisions, Banxico’s inflation forecasts remain below private-sector expectations over most of the forecast horizon. In our opinion, the continuous revisions to Banxico’s forecasts could hinder their communication efforts and complicate the process of anchoring inflation expectations, particularly in the current environment of high uncertainty about price dynamics, which would inject further uncertainty in the trajectory of monetary policy.”

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 35 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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