Mexico, Colombia and Chile Rates: Banxico to BCCh — 2026-10-24
Mexico's inflation accelerated to 3.62% in early October, effectively ending hopes for a Banxico rate cut on November 5 and pushing the peso to an October low of 18.67 per dollar. Meanwhile, Colombia's central bank raised rates to 12.25% amid fiscal concerns, while Chile faces potential currency volatility with analysts warning of brief spikes above 1,000 pesos per dollar.
Mexico, Colombia and Chile Rates: Banxico to BCCh — 2026-10-24
Top developments
Mexico Inflation Surges, Dimming Rate Cut Hopes
Mexico’s annual inflation rose to 3.62% in the first half of October, exceeding forecasts and core price expectations. This data significantly reduces the likelihood that Banxico will cut its benchmark rate from 6.50% at the upcoming November 5 meeting. Consequently, a Citigroup survey released on October 20 indicates that most private economists now expect Banxico to hold rates steady at 6.50% through 2027.

Peso Hits October Low as Carry Trades Unwind
The Mexican peso fell 1.3% to approximately 18.67 per US dollar on October 21, marking its weakest close of the month. The depreciation was driven by the unwinding of carry trades and rising geopolitical risks in the Middle East, which heightened demand for the safe-haven dollar. By October 22, the currency hovered near 18.50–18.66 levels as investors digested the hot inflation print.

Colombia Raises Rates to 12.25% Amid Fiscal Pressure
Colombia’s central bank lifted its benchmark interest rate by 0.25 percentage points to 12.25% in late September, a decision that continues to shape market expectations this week. Governor Leonardo Villar cited persistent inflation and mixed economic performance as the primary drivers for the hike. Recent reports highlight that the central bank remains concerned about the impact of the government's fiscal deficit on credit and dollar dynamics.

Chile Peso Volatility and Fiscal Adjustments in Colombia
In Chile, currency analysts from Credicorp warn that brief spikes in the Chilean peso above 1,000 per dollar are probable, with the dollar closing Friday at its highest level since April 2025. In neighboring Colombia, the Vice President stated that a fiscal adjustment of nearly US$22 billion is needed for 2027, following recent decrees that cut the 2026 budget by US$4.3 billion.

Local view
Local financial media in Mexico, such as El Financiero and El Economista, report that the peso "slid" (resbala) following the inflation data, with the currency losing 0.22% against the dollar on October 22. El Economista notes that Mexican 10-year "M-bonos" maintained yields of 9.25%, keeping public financing costs high, while short-term Cetes showed mixed movements. In Colombia, Portafolio reports that experts project further rate increases if inflation remains elevated, with some studies suggesting a rise to 12.50% by the end of 2026 if inflation hits 6.87%. Diario Financiero in Chile indicates that financial operators anticipate the Central Bank will maintain current rates next week, projecting a 0.5% IPC variation for October.
Context & numbers
- Mexico Inflation: 3.62% annual rate for the first half of October 2026.
- Mexico Benchmark Rate: Held at 6.50%, with consensus expecting no change through 2027.
- Mexico Peso: Closed near 18.67 per USD on Oct 21; traded around 18.50–18.66 on Oct 22.
- Mexico M-Bonos: 10-year yields steady at 9.25%.
- Colombia Benchmark Rate: 12.25%.
- Colombia Fiscal Adjustment: US$22 billion needed for 2027.
- Chile Dollar: Closed at highest level since April 2025; spike above 1,000 seen as probable.
- Mexico Economic Growth: Activity grew 3.3% year-to-year in August, beating the 3.1% forecast.
On the radar
- Banxico Decision: The next monetary policy announcement is scheduled for November 5, with markets pricing in a hold at 6.50%.
- Mexico Q3 GDP: The official quarterly GDP release is due on October 30, following the strong August activity data.
- Colombia Rate Outlook: Analysts are watching for potential further hikes if inflation expectations rise, with some models pointing to 12.50% by year-end.
- Chile IPC: Financial operators expect a 0.5% monthly IPC variation for October, influencing the Central Bank's next decision.
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