Latest bank decision: At its meeting on 19 December, the Central Bank decided to maintain the Bank Rate at 4.75%...
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: Macrobond.
Mexico Interest Rate Data
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Banxico Target Rate (%, eop) | 7.25 | 4.25 | 5.50 | 10.50 | 11.25 |
| TIIE 28 Days Rate (%, eop) | 7.56 | 4.48 | 5.72 | 10.76 | 11.50 |
| 10-Year Bond Yield (%, eop) | 6.86 | 5.47 | 7.55 | 9.04 | 8.97 |
Central Bank decreases rates in December
Latest bank decision: At its meeting on 19 December, the Central Bank decided to lower the target for the overnight interbank interest rate by 25 basis points to 10.00%. Interest rates have now fallen by 125 basis points since early 2024.
Monetary policy drivers: The key domestic factors influencing the Central Bank's decision were clear downtrends in headline and core inflation in recent months, slowing employment, and weak economic prospects for the coming year.
Policy outlook: The Central Bank indicated that it expects the inflationary environment to permit further reductions in the policy rate in the future, and also hinted at cutting by more than 25 basis points per meeting. Our Consensus is currently for close to 200 basis points of further cuts by end-2025. U.S. tariffs are the key risk factor: If implemented, the Bank would likely speed up its easing cycle.
Panelist insight: On the near-term outlook, Itaú Unibanco analysts said: “Our base case remains for the central bank to accelerate its pace in the first meeting of 2025, cutting the monetary policy rate by 50-bp on February 6th.” BBVA analysts said: “The statement’s forward guidance signals that a string of consecutive rate cuts is set to continue ahead and opens the door for considering larger cuts at some meetings. The risks to our end-2025 8.00% below-consensus forecast for the policy rate could even lie to the downside, not to the upside, if tariff risks materialize. They would hit economic activity and the effect of an exchange-rate pass-through would be more than offset by weaker demand amid easing core inflation.”
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 33 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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