Banxico Holds Rates at 6.5% and Splits From the Fed
MEXICO · ECONOMY
Key Facts
- —The country Mexico is Latin America’s second-largest economy, with about 130 million people and the United States as its main market.
- —What happened Banco de México’s Governing Board voted unanimously to keep its overnight target at 6.50 percent.
- —How long The rate has not moved since the cut of 7 May 2026. This was the third meeting since then.
- —Inflation Headline inflation ran at 3.42 percent in early September, with the core rate at 3.79 percent.
- —The catch Banxico does not expect inflation back at its 3 percent target until the fourth quarter of 2027.
- —Why it counts The Fed raised on 16 September. Banxico said its policy need not react mechanically to US moves.
Mexico’s central bank held — and told the market in writing that it will not follow the Fed mechanically.
Banxico holds rates at 6.5 percent after a unanimous vote on 24 September 2026. It is the third meeting in a row without a change, and it comes eight days after the US Federal Reserve raised.
What Banxico decided
Banco de México is the country’s central bank. On 24 September 2026 its Governing Board kept the overnight interbank target at 6.50 percent.
The vote was unanimous, with every member present.
The board said it had weighed four things. First, the behaviour of the exchange rate.
Second, that Mexico and the United States are at different stages of the economic cycle. Third and fourth, the absence of demand pressure at home and how restrictive policy already is.
Four considerations, and the second of them is the one that matters most.
Why Banxico holds rates while the Fed raises
Eight days earlier, on 16 September, the US Federal Reserve raised its target range by a quarter point. The range is now 3.75 to 4.00 percent.
Banxico noted that increase in its own statement, and then drew a line.
Macroeconomic conditions in Mexico differ from those in the United States, it said. So policy would not have to react mechanically to expected moves in the federal funds rate.
That is an unusually direct sentence for a central bank, and it is the news in this decision.
Mexico’s rate now sits between 2.50 and 2.75 percentage points above the Fed’s range. That gap is what draws investors who borrow in dollars and hold pesos for the yield.
It cuts both ways. Money that arrives for yield tends to leave quickly when the yield narrows.
The inflation picture behind the decision
Banxico set out the move in its own terms. Between the first half of July and the first half of September, headline inflation rose from 3.10 to 3.42 percent.
Core inflation, which strips out the most volatile prices, went the other way, easing from 3.95 to 3.79 percent.
Those September readings come from INEGI, the national statistics institute, which publishes a price index twice a month.
Banxico targets 3 percent with a variability interval of one point either side, so both readings sit inside it.
Inside the interval is not the same as finished. The bank still does not expect headline inflation to settle at 3 percent until the fourth quarter of 2027.
What it means for people and firms in Mexico
For anyone with a peso mortgage, a car loan or an overdraft, the cost of that debt does not change this month.
Savers see no change either. The policy rate sits about three points above headline inflation.
What a depositor actually earns is set by their bank, not by Banxico.
Foreign residents paid in dollars see the other side of it. When the peso weakens, their dollars stretch further in Mexico.
Banxico’s own fix put the peso at 17.5030 to the dollar for 23 September, the day before the decision. It had been 17.3015 the day before that.
The peso weakened further on decision day, trading near 17.72 to the dollar. A high policy rate has not held it steady.
None of this is a forecast for the peso. It is what the rate decision does and does not change.
What this does not mean
A hold is not a signal that cuts have resumed, and it is not a promise that they will not.
Banxico named no date for its next move, and the easing cycle has not been declared over.
Nor is a unanimous vote the same as an easy one. Unanimity describes the outcome, not the argument behind it.
And a rate that stays put is not a rate that is low. At 6.50 percent against 3.42 percent inflation, policy is still tight.
What comes next
The minutes of this meeting are due on 8 October, two weeks after the decision, as Banxico’s calendar requires.
They usually say more about the internal argument than the statement does.
The next rate decision falls on 5 November, with a final one for the year on 17 December.
Between now and then, two things decide it. Whether the disinflation continues, and what the peso does if the gap with US rates narrows.
Why a hold is the harder call
Cutting is popular and raising is defensible. Doing nothing satisfies nobody and has to be argued for.
Banxico argued for it on four grounds, and put the divergence with the United States among them in writing.
Standing still while the Fed moves is a statement of independence. This time the bank made it explicit rather than leaving it to be inferred.
Mexico has spent two decades building the credibility that lets it do that. The peso has slipped about three percent in the week to the decision, which is where that credibility gets tested.
Frequently Asked Questions
What rate did Banxico set?
It kept the overnight interbank target at 6.50 percent, unchanged since the cut of 7 May 2026. The vote on 24 September was unanimous.
Will Banxico follow the US Federal Reserve?
It said it need not. Conditions in Mexico differ from those in the United States, so policy need not react mechanically to expected fed funds moves.
When does Banxico expect inflation at target?
In the fourth quarter of 2027. Headline inflation was 3.42 percent in the first half of September against a 3 percent target.
Sources: https://www.banxico.org.mx/publicaciones-y-prensa/anuncios-de-las-decisiones-de-politica-monetaria/%7B7D0BDB6E-E519-9C69-04AA-ABD4D31E4850%7D.pdf; https://www.banxico.org.mx/tipcamb/tipCamMIAction.do?idioma=en; https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm; https://expansion.mx/economia/2026/09/24/banxico-tasa-de-interes-de-referencia-6-5-septiembre
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