Mexico, Colombia and Chile Rates: Banxico to BCCh — 2026-10-22
The Mexican peso hit an October low at 18.67 per dollar as carry trades unwound, while Banxico is expected to hold rates at 6.50% through 2027 following strong retail sales data. In Colombia, the central bank raised its benchmark rate to 12.25%, and analysts warn inflation could push rates to 12.50% by year-end. Chile’s market is increasingly pricing in a potential rate hike due to a misaligned exchange rate.
Mexico, Colombia and Chile Rates: Banxico to BCCh — 2026-10-22
Top developments
Mexican Peso Hits October Low as Carry Trades Unwind
On October 21, the Mexican peso fell 1.3% to approximately 18.67 per US dollar, marking its weakest close of the month. The decline was driven by the unwinding of carry trades and heightened geopolitical risk in the Middle East. Despite the currency's weakness, Mexico’s IPC stock index jumped 1.4% to 70,250, led by a 7.8% surge in América Móvil shares.
Banxico Expected to Hold Rates Through 2027
A Citigroup Mexico survey released on October 20 indicates that most private economists expect Banxico to maintain its benchmark rate at 6.50% through 2027. This consensus is supported by August retail sales data, which rose 1.2%—four times the forecast—reducing the urgency for rate cuts. Citi analysts project Mexico’s GDP will grow 1.4% in 2026 and accelerate to 1.8% in 2027.
Colombia Raises Rates to 12.25% Amid Inflation Risks
The Banco de la República (BanRep) increased its interest rate by 25 basis points to 12.25%, citing persistent inflation and mixed economic performance. Governor Leonardo Villar emphasized that inflationary pressures remain a primary concern for monetary policy decisions. Recent studies warn that if inflation reaches 6.87%, rates could rise further to 12.50% by the end of 2026.
Chile Market Prices In Potential Rate Hike
In Chile, market participants are increasingly open to the possibility that the Central Bank (BCCh) may raise rates within the year. Analysts from Gemines note that the real exchange rate is misaligned with fundamentals, a factor the central bank must consider in its policy decisions.
Local view
Mexican media outlets highlight the peso's volatility, with El Financiero labeling it the "most depreciated currency in the world" against the dollar this week, closing at 18.67 units. El Economista reports that M-bonds (bonos M) at 10 years are maintaining yields of 9.25%, which is increasing the cost of public financing, even as short-term Cetes saw minor fluctuations.
In Colombia, Portafolio notes that financial analysts are prioritizing fiscal direction over interest rates when making investment decisions, according to a Fedesarrollo survey. Meanwhile, Diario Financiero in Chile emphasizes the tension between the rising dollar and the potential need for the BCCh to intervene via rate hikes to stabilize the currency.
Context & numbers
-
Mexico:
- USD/MXN Spot: 18.67 (Oct 21 close)
- M-Bond Yields (10y): 9.25%
- Cetes (28-day): Down 2 basis points; Cetes (91-day): Up 20 basis points to 6.75%
- Retail Sales (Aug): +1.2% month-over-month
-
Colombia:
- BanRep Rate: 12.25% (after 25bp hike)
- Inflation Projection: Potential rise to 6.87% could trigger further hikes to 12.50%
- FX Intervention: BanRep has purchased US$1.096 billion in dollars, completing ~27% of its accumulation target
-
Chile:
- Market Sentiment: Shifting towards expectation of a rate hike due to exchange rate misalignment
On the radar
- Mexico Inflation Data: Today (October 22), Mexico releases inflation data for the first half of October, which is critical for Banxico’s upcoming policy expectations.
- Brazil IPCA-15: Brazil’s pre-inflation index is due on Friday, October 23, potentially influencing regional sentiment.
- Colombia Visa Deadline: An 11-day visa deadline is approaching for certain traveler categories, impacting short-term capital and tourism flows.
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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