Policy rate falls to 6.25 percent in split vote
Banco de México cut its overnight interbank rate target by 25 basis points to 6.25 percent, effective November 6, 2026. The Board described the reduction as a one-time adjustment and envisages holding this level for an extended period.
Three votes for the cut
Victoria Rodríguez, Gabriel Cuadra and Omar Mejía supported the reduction; Galia Borja and Jonathan Heath preferred to hold at 6.50 percent.
The Board judged that disinflation continues, monetary restriction remains effective and economic slack limits exchange rate pass-through.
It saw no demand-side price pressures.
Between the first fortnights of September and October 2026, headline inflation rose from 3.42 to 3.62 percent as non-core inflation increased.
Core inflation edged down from 3.79 to 3.78 percent.
Year-end headline inflation expectations declined, but longer-term expectations remained above target.
Mexico's economy expanded in Q3 2026, although the bank projects persistent slack and downside growth risks.
The peso depreciated.
Higher forecasts, unchanged convergence
For Q4 2026, the bank raised headline inflation to 3.7 percent from 3.5 percent and core inflation to 3.7 percent from 3.6 percent.
Both projections reach the 3.0 percent target in Q4 2027.
Upside risks dominate: core persistence, peso depreciation, trade disruptions, geopolitical conflict, climate impacts and cost pressures.
Downside risks include weaker Mexican or US activity, lower cost pass-through and peso appreciation.
The Federal Reserve held rates in October; advanced-economy inflation faced energy pressures and persistent core inflation.
A cut with a pause
The Board pairs its one-time reduction with guidance for an extended hold.
Future decisions will consider inflation, exchange rate pass-through, economic slack and expectations.
US policy changes and a possible extension of geopolitical conflicts keep the inflation outlook uncertain in both directions.