Mexico, Colombia and Chile Rates: Banxico to BCCh — 2026-09-18
The Federal Reserve’s surprise 25 basis point rate hike to 3.75%-4.00% on September 16 triggered a sharp divergence in Latin American markets, with Colombia’s COLCAP index falling 2.16% while the Chilean peso unexpectedly strengthened. In Mexico, Banxico maintains its 6.50% reference rate amidst growing concerns from local media regarding the sustainability of investment-grade status amid US Treasury yield volatility. Meanwhile, Chile’s central bank signaled a "clearly dominant" consensus to hold rates at 4.5% for the near term, despite rising inflation expectations in the region.
Mexico, Colombia and Chile Rates: Banxico to BCCh — 2026-09-18
Top developments
Fed Hike Hits Colombia Hardest, But Chilean Peso Defies Trend
On September 17, the Colombian COLCAP index dropped approximately 2.16% and the peso slipped significantly following the Federal Reserve’s decision to raise rates by 25 basis points to a range of 3.75%-4.00%, the first hike since July 2023. While most LatAm currencies faced pressure from the stronger dollar and falling oil prices (crude dropped 4%), the Chilean peso emerged as an outlier, strengthening to 951.49 per dollar against a backdrop of falling equity markets. The divergence highlights how Chile's current account surplus and commodity exposure provided a buffer against the broader regional sell-off driven by US monetary tightening.
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BanRep Raises Inflation Forecasts to Nearly 7%
The Banco de la República (BanRep) of Colombia revised its inflation expectations for December 2026 upward to nearly 7% (specifically 6.54% in some metrics, rising 0.21 points from August), significantly exceeding its 3% target. This revision complicates the central bank's path, with experts suggesting a potential 25 basis point hike could still be on the table for the December meeting, although the primary focus remains on the upcoming September 30 policy decision. Local analysts at Portafolio note that the Board is divided on whether to hike or hold at the end of September, with the revised inflation outlook tilting the debate toward tighter policy.
BCCh Minutes Confirm "Clearly Dominant" Hold Strategy
Minutes from the Banco Central de Chile’s (BCCh) recent meeting revealed that maintaining the key policy rate at 4.5% was "clearly dominant" among board members, who voted unanimously to hold. Despite this consensus, all council members emphasized the need to monitor alternative scenarios that could require adjustments to monetary policy orientation, signaling caution amid global volatility. Traders surveyed by the BCCh now expect the rate to remain stuck at 4.5% for two years, indicating a prolonged period of stability despite external shocks from the Fed.
Mexico Peso Eases as US Yields Hover Near 5%
Following the Fed’s announcement, the Mexican peso eased slightly, trading around 16.96-16.97 per dollar, as US 10-year Treasury yields hovered near 5%. The S&P/BMV IPC rose 0.46% to 64,216.98, showing resilience in equities despite currency softness. Local media outlets like Código Magenta have raised alarms that turbulence in the bond market, specifically high US yields, threatens Mexico's investment-grade debt standing, prompting investors to question the fiscal trajectory.
Local view
In Mexico, El Financiero reported that the peso "scratched" the 17-per-dollar level due to new tariff threats and global yield pressures, closing at 16.9705 on September 11 before easing further post-Fed. In Chile, El Dinamo analyzed the impact of the Fed's hike, noting that while BCCh held rates, the higher US benchmark could pressure the exchange rate and limit future easing cycles. Colombian outlet La República highlighted the BanRep's difficult position, balancing a 6.6%+ inflation expectation against growth concerns, with the central bank now seeing only one potential 25bp hike for the rest of the year.
Context & numbers
- Fed Policy: Raised rates by 25bps to 3.75%-4.00% on Sept 16; projected another increase in 2026.
- US Treasury Yields: 10-year yields hovered near 5%, pressuring emerging market currencies.
- Chilean Peso: Strengthened to 951.49 per USD on Sept 17, defying regional weakness.
- Colombian Equity: COLCAP fell 2.16% on Sept 17, leading LatAm losses.
- Mexican Equities: IPC rose 0.46% to 64,216.98 on Sept 15.
- Oil: Brent crude jumped toward $108 before dropping 4% following the Fed decision.
On the radar
- BanRep Decision (Sept 30): The Colombian central bank will announce its next rate move, with markets watching closely for a potential hike given the revised inflation forecasts.
- Mexico Independence Day Market Closures: Mexican banks and FX fixing were closed on September 16 for Independence Day, creating liquidity gaps that may persist into the early week.
- US Rate Path: The Fed's projection of another hike in 2026 will continue to weigh on carry trade appetite for Mexican and Colombian assets.
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.
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