Overnight interbank rate maintained at 7.00 percent
Banco de México's Governing Board decided unanimously to maintain the target for the overnight interbank interest rate at 7.00 percent. This decision pauses the rate-cutting cycle amid revised inflation forecasts.
Inflation outlook drives pause
Banco de México's Governing Board unanimously decided to maintain the target for the overnight interbank interest rate at 7.00 percent, pausing its rate-cutting cycle.
This decision is consistent with the current inflationary outlook, which reflects an upward revision to headline and core inflation forecasts for the first quarter of 2026 through the first quarter of 2027. Headline inflation is now expected to converge to the 3 percent target in the second quarter of 2027. The Board also considered the need to evaluate the impact of fiscal adjustments implemented at the beginning of the year, the behavior of the exchange rate, and the weakness of economic activity.
Risks to the inflation trajectory are considered closer to balance but remain biased to the upside, with changes in US economic policy adding further uncertainty.
Global and domestic economic shifts
Global economic activity is estimated to have continued declining in the fourth quarter of 2025, amidst persistent trade tensions.
Headline inflation in some major advanced economies slightly decreased, while core inflation showed persistence.
The Federal Reserve kept its federal funds rate unchanged in January.
Domestically, Mexico's government interest rates decreased, and the Mexican peso appreciated.
Economic activity expanded in the fourth quarter of 2025, following a contraction in the third quarter.
Headline inflation decreased from 3.80 percent to 3.77 percent between November 2025 and mid-January 2026, mainly due to a decline in non-core inflation.
Core inflation, however, rose from 4.43 percent to 4.47 percent.