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Mexican peso extends 10-day rally after Banxico keeps rates steady

Banxico held its policy rate at 6.5% for a second straight meeting, pointing to a gradual inflation decline and keeping rates at current levels into 2027.

Reported · Written up by our desk · Major Pairs

The Mexican peso extended a rally for a 10th straight day after the Bank of Mexico (Banxico) left interest rates unchanged, FXStreet reported. The USD/MXN exotic pair was last around 17.21, following a daily high near 17.26, as the central bank kept policy steady.

Banxico maintained its policy rate at 6.5% unanimously for the second straight meeting, according to FXStreet. In its monetary policy statement, it said both headline and core inflation are still expected to fall over the forecast horizon, but more gradually than previously anticipated, and that rates are expected to stay at current levels for the foreseeable future.

The central bank projected headline and core inflation to reach 3% in Q4 2027, while expecting 2026 CPI to end at 3.5% for both headline and core measures, FXStreet added. Banxico also noted economic slack would persist through the forecast period and that there are substantial downside risks to activity.

On the macro backdrop, FXStreet pointed to a softer but still positive US jobs picture, including initial jobless claims of 199K for the week ending August 1, and a 27% drop in planned layoffs to 33,429 in July. The report also cited St. Louis Fed President Alberto Musalem’s hawkish remarks, and said money markets were pricing a 58% chance of a 25 basis point Fed rate increase at the September 16 meeting.

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