Mexico, Colombia and Chile Rates: Banxico to BCCh — 2026-10-29
Chile's central bank unanimously held its benchmark rate at 4.5% on October 27, citing rising global inflation risks and domestic supply shocks. Meanwhile, the Mexican peso slipped to 18.68 per dollar ahead of the Fed's decision, while Colombia launched its first global bond sale since January to refinance debt.
Mexico, Colombia and Chile Rates: Banxico to BCCh — 2026-10-29
Top developments
Chile holds rates at 4.5% amid rising inflation risks
The Central Bank of Chile (BCCh) kept its policy rate unchanged at 4.5% on October 27, a decision adopted unanimously by its board. The bank warned that inflation risks have risen due to higher oil and food prices, alongside a weaker-than-expected economic performance driven by mining supply issues and climate shocks. While the board maintained a restrictive stance, market traders are increasingly pricing in the possibility of a rate hike in December, with inflation projected to hover above the 3% target.
Mexican peso weakens ahead of Fed decision
The Mexican peso depreciated by 0.65% to close at 18.68 per US dollar on October 27, as investors awaited the Federal Reserve’s latest policy announcement. The move reflects a slight unwinding of carry trade positions and sensitivity to US rate expectations, despite Banxico’s recent signals of comfort with holding rates at 6.50%. Deputy Governor Galia Borja recently described the current rate level as a "good monetary position," reinforcing the view that no immediate cuts are expected.
Colombia launches first global bond sale since January
Colombia returned to the international debt markets on October 26 with a new issuance of dollar-denominated bonds maturing in 2032, 2037, and 2056. This marks the country’s first global bond sale since January 2026, aimed at refinancing existing obligations. While specific details on the total size and coupon rates were not immediately disclosed, the issuance highlights the government’s effort to manage its debt profile amid persistent inflation concerns and a rating environment below investment grade.
Local view
Local media outlets highlighted the unanimous nature of Chile’s rate hold, with Diario Financiero noting the bank’s decision to analyze the economic situation "meeting by meeting" given the increased uncertainty. In Mexico, El Financiero reported that the peso’s weakness was exacerbated by inflation data that came in higher than expected, reducing hopes for near-term rate cuts from Banxico. The press emphasized that while inflation is closer to the target range, the central bank’s work is "not yet finished."
Context & numbers
- Chile Rate: Held at 4.5% (October 27).
- Mexico Rate: Banxico Deputy Governor confirmed comfort with holding at 6.50%.
- Peso Level: USD/MXN closed at 18.68 on October 27, down 0.65% for the day.
- US 10-Year Treasury: Yield rose to 5.045% following the Fed’s rate hold, impacting global risk assets.
- Colombia Inflation: Annual inflation rose to 6.24% in August 2026, up from 6.03% in July.
- Carry Trade: Bloomberg reported that yen-funded carry trades in Latin America remained intact despite volatility following Brazil’s election, indicating sustained demand for higher-yielding LatAm assets.
On the radar
- Fed Decision Outcome: The Federal Reserve held rates at 3.75%-4% on October 28, a decision that will likely trigger further volatility in LatAm currencies and bond yields in the coming days.
- Chile December Meeting: Markets are watching for any shift in the BCCh’s tone that might signal a rate hike in December, as six of 62 traders now see that outcome.
- Colombia Bond Pricing: Final pricing details for the new Colombian global bonds are expected to be released shortly, which will set the benchmark for future sovereign issuances in the region.
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