Banco de México cut its benchmark interest rate by 25 basis points on Thursday 5 November, lowering it from 6.50 to 6.25 percent. Most analysts had expected the central bank to hold rates unchanged, so the decision came as a surprise.
Pressure on the peso
The cut reduces the appeal of Mexican financial instruments at a time when the US Federal Reserve could raise rates again. Lower Mexican yields alongside higher US rates threaten to narrow the spread between the two countries.
That narrowing could push investors toward dollar-denominated assets. Gabriela Siller, director of economic and financial analysis at Banco Base, said the peso could reach 19 per dollar before the end of 2026 if the Fed keeps raising rates or if risks materialise.
Outlook for 2027
Siller said the same conditions could push the exchange rate to 19.50 pesos per dollar in 2027. Her projections assume the Fed continues to tighten.
Source: Bank of Mexico
