Banxico Cuts Rate to 6.25% in Surprise Move; Dollar Hits 19.29 Pesos
Banxico lowered its benchmark rate to 6.25% on Nov. 5 against most forecasts, and the peso fell. What changed, who voted how and what comes next.
The Bank of Mexico (Banxico) cut its benchmark interest rate from 6.50% to 6.25% on Thursday, Nov. 5, surprising most analysts after it had left the rate unchanged three times in a row. The peso was the worst-performing currency of the day, according to El Universal.
By Thursday afternoon, Banamex branches in Mexico City were selling dollars at 19.29 pesos, 27 centavos more than the day before. In the wholesale market the exchange rate rose 34 centavos to around 18.96, El Universal reported.
What it means for the peso and prices
For people who earn in dollars and spend in pesos, or who send and receive remittances, the dollar now buys more pesos than it did a day earlier. The retail dollar at Banamex has gained 81 centavos so far in 2026, according to El Universal. Anyone paying in dollars, such as for imported goods, US subscriptions or travel, now has to put more pesos on the table.
The cut also pushed the gap between Mexican and US interest rates to a record low of 225 basis points, El Financiero reported, after the US Federal Reserve made no change at its October meeting. That gap was one of the reasons the peso lost 6% against the dollar in September, the paper said.
Carlos López Jones, director of the firm Tendencias Económicas y Financieras, told El Financiero he sees a 75% probability that the Fed raises its rate in December. He said a shrinking gap between peso and dollar returns drives investors away, puts pressure on the peso and feeds inflation.
How the board voted
The Governing Board split. Governor Victoria Rodríguez Ceja and deputy governors José Gabriel Cuadra García and Omar Mejía Castelazo voted for the 25-basis-point cut. Deputy governors Galia Borja Gómez and Jonathan Heath preferred to keep the rate at 6.50%.
According to El Financiero, 6.25% is Banxico’s lowest rate since at least 2022. The last time it sat near this level was February of that year, when it was 6%.
Why the decision caught markets off guard
Most forecasters expected a hold. Reports differ on the exact numbers from Citi’s survey of analysts this week: El Universal said 30 of 36 banks, brokerages and research groups expected no change, while El Financiero put it at 20 of 35 respondents. Both outlets agree that only six institutions called the cut: Barclays, Bankaool, Bradesco BBI, Finamex, Itaú BBA and UBS.
Gabriel Casillas, chief Latin America economist at Barclays, was among those who predicted it. Before the announcement he told El Financiero he expects the bank to lower the rate further, to 6%, in the first quarter of 2027.
Inflation forecast goes up
Banxico raised its inflation forecast for the fourth quarter of 2026 from 3.5% to 3.7%, El Financiero reported. It still expects consumer prices, measured by the National Consumer Price Index (INPC), to reach its 3% target only in the last quarter of 2027.
The bank’s statement also dropped an earlier line saying the board does not “have to react” to US monetary policy decisions, according to El Financiero.
What Banxico signaled next
In its statement, the board said keeping the rate at its current level for a prolonged period will help bring inflation to target and deal with external economic challenges. El Financiero read this as a sign the rate will stay at 6.25% at least until 2027. That reading differs from the Barclays forecast of another cut early next year.
Sources: El Universal, El Financiero
