Key Economic Updates from Citi Mexico Survey
According to the latest Citi Mexico Survey, analysts have revised their expectations for Mexico’s economic growth in 2026, reducing it from 1.5% to 1.2%. Meanwhile, the forecast for 2025 remains unchanged at 0.1%.
Interest Rate Decision
The survey indicates that analysts anticipate the Banco de Mexico will announce a 50 basis points reduction in its interest rate to 8.0% on Thursday, with 31 out of 33 participants expecting this cut and two others predicting a smaller reduction of 25 basis points.
Interest Rate and Exchange Rate Projections
The median prediction for the official interest rate by the end of 2025 remains at 7.50%, with estimates ranging from 7% to 8%. For the end of 2026, the median has been lowered from 6.75% to 6.88%.
Analysts also improved their outlook for the Mexican peso, expecting it to close 2025 at 20.20 pesos per dollar, a decrease from the previous forecast of 20.50 pesos. By the end of 2026, they project the exchange rate to be 20.70 pesos per dollar, down from the previous projection of 20.90 pesos.
Inflation Forecasts
The survey maintained its 3.90% projection for general inflation by the end of 2025 but increased the subyacente (excluding volatile items like food and energy) inflation forecast from 3.90% to 3.95%. For the end of 2026, analysts kept their inflation projections unchanged at 3.75% for general inflation and 3.70% for subyacente inflation.
The median expected annual average inflation rate for 2027-2031 remained unchanged at 3.70%.
Short-term inflation projections indicate a general inflation rate of 0.12% and subyacente inflation of 0.17% for the first half of June, with a projected general inflation rate of 0.26% monthly or 4.30% interannual for the entire month of June, lower than May’s rate of 4.42%.
Key Questions and Answers
- Q: What changes have Mexican analysts made to their economic growth forecast for 2026? A: They have lowered the forecast from 1.5% to 1.2%.
- Q: What is the expected interest rate cut by Banco de Mexico? A: Analysts anticipate a 50 basis points reduction, bringing the rate to 8.0%.
- Q: How have the interest rate and exchange rate projections changed? A: The median prediction for the official interest rate by the end of 2025 is 7.50%, while for 2026 it has been lowered to 6.88%. The peso is expected to close 2025 at 20.20 pesos per dollar and 20.70 pesos per dollar by the end of 2026.
- Q: What are the updated inflation forecasts? A: General inflation is projected at 3.90% by the end of 2025 and 3.75% by the end of 2026. Subyacente inflation is expected at 3.95% by the end of 2025 and 3.70% by the end of 2026.
- Q: What are the short-term inflation projections for June? A: General and subyacente inflation are projected at 0.12% and 0.17%, respectively, for the first half of June. The general inflation rate is expected to be 0.26% monthly or 4.30% interannual for the entire month of June.
