The Bank of Mexico held its benchmark interest rate at 7 percent. This decision ended a series of 12 consecutive cuts that began in March 2024. The unanimous vote marked the first pause in nearly two years.
Historical Easing Cycle
The central bank, known as Banxico, started reducing rates from a high of 11.25 percent. It lowered the rate by 25 basis points in December 2025 to reach 7 percent. Previous cuts included a reduction to 7.25 percent in November 2025. These actions responded to easing inflation pressures at the time.
The February Decision
Banxico’s governing board decided unanimously on February 5, 2026, to maintain the rate. The board stated, “This pause is consistent with the assessment of the current inflation outlook.” Additionally it aimed to evaluate policy impacts.
Reasons for Pause
Upside risks to inflation prompted the hold. Persistent trade tensions, especially with the United States, added pressure. Furthermore core inflation remained above the target range. The board also considered effects from higher taxes and tariffs.
Economic Indicators
Headline inflation stood at 3.77 percent in mid-January 2026, down from 3.80 percent in November 2025. However core inflation rose to 4.47 percent. Mexico’s economy grew 0.7 percent in 2025, its weakest since the pandemic. It expanded in the fourth quarter after a third quarter contraction.
Future Outlook
Banxico projected inflation would converge to the 3 percent target by the second quarter of 2027. Downside risks from global uncertainty persisted. Economists surveyed by Bloomberg expected the pause. All 27 analysts forecasted the hold.
Expert Reactions
Analyst Javier Amador from BBVA Research noted the pause weighed inflation and growth risks. He stated, “Banxico set to pause as it weighs inflation and growth risks.” The decision reflected caution amid trade vulnerabilities.
