Bank of Mexico Holds Benchmark Interest Rate Steady — Update

By Anthony Harrup

MEXICO CITY--The Bank of Mexico left its benchmark interest rate unchanged Thursday as expected, and said that future decisions will depend on how inflation and economic data evolve.

The five-member board of governors voted unanimously to keep the overnight interest rate target at 6.5%, staying on hold for a third consecutive meeting.

The central bank dropped the phrase from previous statements that it expects to keep the rate at the current level, and instead said that future decisions would depend on how inflation performs.

"The governing board will make its decisions considering the ongoing disinflation process and the expected behavior of its determinants, including the exchange rate pass-through to consumer prices, the slack conditions, and inflation expectations," the central bank said.

The bank added that it won't necessarily react automatically to further increases in U.S. interest rates. The Federal Reserve raised the federal funds rate last week, and market expectations have risen for an additional increase in October.

"Since macroeconomic conditions in Mexico are different from those in the United States, monetary policy would not have to react mechanically to the anticipated adjustments to the federal funds rate," the Bank of Mexico said.

That "reinforces our view that the bar for additional tightening remains high, absent a sharp and persistent currency depreciation," Citi Research analysts Julio Ruiz and Felipe Juncal said in a note. At the same time, a less negative assessment of economic activity "also reduces the likelihood that Banxico would consider rate cuts in the near term," they added.

The Bank of Mexico "was clearly keen to push back against expectations that it will raise interest rates just because the Fed has tightened policy," Capital Economics senior emerging markets economist Liam Peach wrote. But "we think the odds remain tilted towards an interest-rate hike over the next six months or so."

Inflation in Mexico has picked up since the central bank's previous meeting and stood at 3.42% in mid-September, up from 3.12% in July. Core inflation eased to 3.79% from 3.95% in July. The Bank of Mexico said it still expects inflation to reach its 3% target in the fourth quarter of 2027.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

September 24, 2026 16:53 ET (20:53 GMT)