Mexico, Colombia and Chile Rates: Banxico to BCCh — 2026-09-11

Top developments

Chile holds rates at 4.5% amid double inflation forecast miss

On September 8, the Central Bank of Chile (BCCh) decided by unanimity to keep its Monetary Policy Rate (TPM) at 4.5%, extending the pause that began in December 2025. The decision coincided with the release of August CPI data showing annual inflation jumped to 4.1%, up from 3.5% in July and double the market forecast of roughly 2%. The BCCh cited weak local growth and external tensions as reasons for caution, noting that the economic slowdown might be "more persistent" than previously expected.

Mexico’s inflation accelerates to 3.26% as peso tests 17.00 level

Mexican consumer prices rose 3.26% year-on-year in August, an acceleration from previous months that challenges Banxico’s hold strategy. The peso depreciated to close at 16.99 per dollar on September 10, driven by higher US producer prices and a stronger dollar. Local media noted that the rising yield on US Treasuries is negatively impacting investor sentiment toward Mexican assets, with the S&P/BMV IPC index struggling to maintain momentum despite a 0.44% rise earlier in the week.

Citi survey predicts Banxico freeze through 2027

A September "Expectations Survey" by Citi revealed that most private economists expect Banxico to hold its benchmark rate at 6.50% through 2027, citing sticky core inflation. Despite the rate freeze, analysts forecast the Mexican peso will strengthen against the dollar, ending 2026 below the 18.00 threshold. This consensus suggests that while the carry trade remains attractive, the window for further rate cuts has effectively closed for this cycle.

Colombian inflation expectations rise to 6.6%, challenging BanRep

In Colombia, annual inflation remains elevated near 6.2%, with expectations for 2026 climbing to 6.6% according to recent surveys. Local media outlets like El Tiempo have highlighted that the persistent failure to meet inflation targets is damaging confidence in the Banco de la República’s monetary framework. This dynamic keeps pressure on the central bank to maintain restrictive policies longer than initially hoped, affecting TES bond yields and peso volatility.

Local view

Mexico: El Financiero reported that the peso is facing a "dangerous rebound" toward the 17.00 per dollar level, driven by global risk aversion and domestic fiscal uncertainties surrounding the upcoming 2027 Economic Package. La Jornada emphasized that rising US bond yields are directly hitting the sentiment of investors in Mexican debt, creating headwinds for local markets.

Chile: ADN Radio noted that the BCCh’s decision to hold rates reflects a cautious stance due to low local economic growth and geopolitical tensions in the Middle East. El Economista highlighted that the TPM has remained unchanged since December, signaling a prolonged period of stability despite mixed economic signals.

Context & numbers

• Chile: Annual inflation (Aug 2026): 4.1%; Monthly change: 0.6%. Policy Rate: 4.5% (held). IPSA Index: 11,315.26 (down 1.14% on Sep 8). USD/CLP: ~925.28
• Mexico: Annual inflation (Aug 2026): 3.26%. Policy Rate: 6.50% (held). USD/MXN: Closed at 16.99 on Sep 10. S&P/BMV IPC: 65,010 (up 0.44% on Sep 9)
• Colombia: Annual inflation (June 2026 data cited in recent analysis): 6.14%. Policy Rate: 12.00% (held). USD/COP: ~3,169 (Sep 2 data). COLCAP Index: Up 0.77% on Sep 2

On the radar

• Mexico 2027 Economic Package: Markets are closely watching the government's fiscal projections and growth estimates for 2026-2027, which are expected to influence peso stability and bond yields in the coming weeks.
• US Fed Policy Impact: Traders remain sensitive to US Producer Price Index (PPI) data and Fed commentary, which continue to drive dollar strength and impact LatAm carry trades.
• BanRep Governor Comments: Attention is turning to upcoming comments by the Governor of Banco de la República regarding the revised draft National General Budget for 2027, which may provide clues on fiscal-monetary coordination.