Price stability and autonomy guide BANXICO's 2026 monetary policy

Banco de México's 2026 Monetary Policy Program fulfills Article 51 of its Law, mandating an annual exposition of policy criteria to the Federal Executive and Congress.

Article 28 of the Mexican Constitution establishes the central bank's autonomy and its primary objective: to ensure the stability of the national currency's purchasing power.

This mandate is complemented by responsibilities to promote a sound financial system and efficient payment systems.

The document emphasizes that autonomy is crucial for achieving price stability with a long-term perspective, citing international evidence linking central bank independence to low and stable inflation.

The program details the significant economic and social costs of inflation, including reduced purchasing power, increased uncertainty hindering long-term planning, distorted resource allocation, and potential financial disintermediation.

These adverse effects underscore the critical importance of the central bank's mandate for national economic development and public welfare.

Banco de México adopted an inflation targeting regime in 2001, establishing a permanent target of 3 percent annual variation in the National Consumer Price Index (INPC) in 2003. A variability interval of plus/minus one percentage point around this target accounts for short-term factors.

Since 2018, the central bank has operated under a forecast-based inflation targeting regime, aligning its policy stance with inflation forecasts to meet its mandate.

The overnight Interbank Interest Rate serves as the main policy instrument, influencing market interest rates, asset prices, the exchange rate, and inflation expectations.

These channels collectively form the monetary policy transmission mechanism, primarily affecting aggregate demand to guide inflation towards the 3 percent target.