Mexico, Colombia and Chile Rates: Banxico to BCCh — 2026-10-08
Banxico’s September minutes, released today, revealed that three of five board members are open to a rate cut if inflation continues to cool, despite holding the policy rate at 6.50%. Meanwhile, Colombia’s central bank minutes exposed significant internal disagreement over its surprise hike to 12.25%, with four directors favoring the move and one pushing for even tighter policy. In Chile, the World Bank slashed its 2026 growth forecast to 0.8%, adding pressure on the peso which is hovering near year-low levels.
Mexico, Colombia and Chile Rates: Banxico to BCCh — 2026-10-08
Top developments
Banxico Minutes Open Door to Rate Cut Despite Upside Risks
On October 8, Banxico released minutes from its September meeting, showing that while the board unanimously held rates at 6.50%, three members indicated they could consider a "one-off trim" if inflation trends downward. This dovish signal emerged alongside data showing Mexico’s September inflation rose to 3.45%, less than expected but accelerating for the second consecutive month due to energy and agricultural pressures. The minutes explicitly acknowledged that inflation risks remain tilted to the upside, creating a complex backdrop for future decisions.

Colombia’s BanRep Minutes Reveal Fractures Over 12.25% Hike
Minutes from the Banco de la República’s September 30 meeting, published on October 7, highlighted a divided board regarding the surprise 25 basis point hike to 12.25%. Four directors supported the increase citing rising food and energy prices, two voted to hold rates steady, and one argued for a 50 basis point hike. This split reflects growing concern over sticky inflation, which hit 6.29% in September, and mixed economic performance, complicating the path for future policy adjustments.

World Bank Slashes Chile Growth Forecast to 0.8%
The World Bank cut its 2026 GDP growth forecast for Chile to 0.8% from 2.4% in April, citing weak domestic demand and global headwinds. This significant downgrade comes as the Chilean peso (CLP) struggles against the dollar, having reached its weakest level in over a year at 983.84 CLP/USD earlier this week. The sluggish growth outlook limits BCCh’s room for monetary easing, as policymakers balance low activity with persistent inflation risks.

Mexican Peso Weakens Past 18 Against Dollar Amid Carry Trade Unwind
The Mexican peso depreciated more than 1% on October 8, breaking above the 18.00 MXN/USD level following the release of Banxico’s minutes. Traders cited a narrowing interest rate differential with the US, where the 10-year Treasury yield remains elevated near 5.34%, as the primary driver for exiting carry trades. Speculators have already cut net long bets on the peso to their lowest levels since mid-September, reflecting reduced appetite for LatAm FX carries.

Local view
- El Cronista (Mexico): Highlights that the peso's depreciation is driven by both the "hawkish" tone of US yields and the nuanced message from Banxico, which, while holding rates, signaled potential cuts only if inflation cools significantly. The outlet notes that energy and agricultural inflation are "corraling" Banxico's margin for maneuver.
- Infobae (Colombia): Focuses on the "fractures" within the Banco de la República, noting that the decision to hike rates was not unanimous and that internal disagreements over the severity of inflation risks could lead to further volatility in TES bonds.
Context & numbers
- Mexico Policy Rate: 6.50% (Held).
- Mexico September Inflation: 3.45% YoY (Accelerated from previous month).
- Colombia Policy Rate: 12.25% (Hiked 25bps).
- Colombia September Inflation: 6.29% YoY.
- Chile Policy Rate: 4.50% (Last decision in September; next meeting pending).
- USD/MXN Spot: >18.00 (Weakest since early September).
- USD/CLP Spot: ~980-985 (Near yearly lows).
- US 10-Year Yield: ~5.34% (Highest since 2002 levels).
- CFTC Speculative Longs (MXN): 52,402 contracts (Down from prior week).
On the radar
- Peru BCRP Decision: The Central Bank of Peru held rates at 4.25% on October 7, citing El Niño risks and Middle East tensions, providing a regional contrast to Colombia's tightening.
- US Fed Minutes: Markets are awaiting the release of the Federal Reserve's latest meeting minutes, which could further influence the USD/MXN differential and carry trade viability.
- Tropical Storm Simon: Approaching Jalisco, Mexico, potentially impacting agricultural supply chains and near-term inflation expectations for food items.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.