Market Data 
- Citi’s April survey shows a sharp growth outlook decline: 2025 GDP seen at 0.3%, down from 0.6%.
- Most analysts forecast Banxico will cut rates to 8.5% in May; the 2025 year-end rate is seen at 8%.
On Monday, Citi revealed its latest Mexico Expectations Survey, in which private economists projected that the economy would grow 0.3% in 2025, less than the 0.6% expected in the last survey. For 2026, the GDP growth is expected to decrease from 1.7% to 1.5%.
Banxico to lower rates to 8% in 2025 and to 7% in 2026
For the upcoming Banco de Mexico (Banxico) meeting in May, 29 analysts estimate the central bank will lower rates 50 basis points (bps) to 8.50%. Three participants project a 25-bps rate cut. For the rest of the year, the median expects Mexico’s interest rates to end at 8%, and for 2026, the median forecasts rates at 7%.
USD/MXN exchange rate for the year-end in 2025 is 20.90, and for 2026, it is projected to rise to 21.30, 20 cents lower than the previous survey.
March headline inflation is projected to end at 3.8% YoY, higher than February’s 3.77% rate. Core figures are projected to end at 3.64% YoY, lower than the previous month of 3.65%.
Inflation expectations remained stable in 2025, with headline figures expected at 3.80% for the full year and an increase from 3.66% to 3.7% by the year’s end. For 2026, inflation is expected to remain at 3.78%, unchanged from the previous survey.
Banxico FAQs
The Bank of Mexico, also known as Banxico, is the country’s central bank. Its mission is to preserve the value of Mexico’s currency, the Mexican Peso (MXN), and to set the monetary policy. To this end, its main objective is to maintain low and stable inflation within target levels – at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%.
The main tool of the Banxico to guide monetary policy is by setting interest rates. When inflation is above target, the bank will attempt to tame it by raising rates, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN. The rate differential with the USD, or how the Banxico is expected to set interest rates compared with the US Federal Reserve (Fed), is a key factor.
Banxico meets eight times a year, and its monetary policy is greatly influenced by decisions of the US Federal Reserve (Fed). Therefore, the central bank’s decision-making committee usually gathers a week after the Fed. In doing so, Banxico reacts and sometimes anticipates monetary policy measures set by the Federal Reserve. For example, after the Covid-19 pandemic, before the Fed raised rates, Banxico did it first in an attempt to diminish the chances of a substantial depreciation of the Mexican Peso (MXN) and to prevent capital outflows that could destabilize the country.
