Mexico monetary policy and Banxico’s policy-rate decision: HSBC expects Banxico to unanimously hold at 6.5% on 24 September as a policy stalemate persists.

Overview

HSBC previews Banxico’s sixth 2026 rate decision, expecting a unanimous hold at 6.5% on 24 September. The report argues that domestic inflation risks and a hawkish Fed support a prolonged hold rather than either near-term easing or tightening.

Core views

HSBC expects Banxico to leave its policy rate unchanged at 6.5% in a unanimous vote on 24 September, its sixth policy decision of 2026. This outcome is described as consistent with both consensus expectations and market pricing, so HSBC anticipates a muted initial market reaction. The central focus after the decision should instead be the forward-guidance language. The report expects Banxico to retain a cautious tone because annual inflation bottomed in July and has since resumed rising. HSBC expects this upward path to continue as fresh-food prices gradually reverse, El Niño poses risks, and services-price inflation remains sticky. These factors lead HSBC to expect most Board members to remain cautious. Accordingly, it expects the guidance stating that the Board considers maintaining the reference rate at its current level appropriate to remain broadly unchanged. HSBC notes that stable long-term inflation expectations, a negative output gap and a strong MXN had been cited by some Board members as dovish considerations in the latest minutes. However, it believes the Federal Reserve’s hawkish shift offsets those domestic arguments for easing. The practical implication is that Banxico’s room to cut rates further has narrowed. At the same time, HSBC does not expect US rate increases to prompt Banxico to raise rates. It maintains its prior scenario view that one or two separate US hikes would not cause a Mexican hike, particularly while the MXN remains strong, which it regards as important to Banxico’s capacity to decouple from the Fed. HSBC therefore expects the policy stalemate to extend, with the 6.5% rate remaining in place for longer. The report also flags the fiscal outlook for monitoring: the 2027 Economic Program assumes a 6.0% policy rate by end-2027.

Analysis framework

HSBC combines its expected policy decision with market and consensus pricing, then assesses inflation trends, domestic easing considerations, the MXN, and the Fed’s policy shift. It uses previously outlined Fed-related scenarios to distinguish why tighter US policy may constrain Mexican cuts without requiring Banxico hikes.

Methodology notes

• Other

  Fed-related policy scenario analysis

  HSBC applies previously developed scenarios for possible Federal Reserve hikes to judge how external monetary tightening affects Banxico’s scope to cut or hike.

Key data

• Expected Banxico policy rate6.5%HSBC forecasts an unchanged, unanimous decision on 24 September 2026.
• Banxico decision timing24 September 2026The central bank’s sixth policy rate decision of 2026.
• Inflation trendBottomed in July and resumed an upward trajectoryHSBC cites fresh-food-price reversal, El Niño risks and sticky services prices as reasons for continued gradual increases.
• 2027 Economic Program policy-rate assumption6.0% by end-2027A fiscal-program assumption that HSBC identifies as a point to monitor.

Impact & implications

HSBC expects policy guidance and the outlook for eventual cuts to matter more than the widely anticipated hold itself. Its view is that a hawkish Fed makes further easing more difficult, but strong MXN conditions mean Banxico is not expected to follow US hikes with rate increases.

Risks

• El Niño risks could contribute to a gradual increase in inflation.
• Sticky services prices could reinforce the cautious policy stance.

What to watch

• Any change in Banxico’s forward guidance on maintaining the reference rate at its current level.
• The path of inflation, including fresh-food prices and services-price stickiness.
• Further Federal Reserve hawkishness and its effect on Banxico’s room to cut.
• The fiscal outlook and the 2027 Economic Program assumption of a 6.0% policy rate by end-2027.