Background on the Survey and Key Participants
The Citi Mexico Survey, which gathers insights from 33 analysts, recently reported a downward revision in Mexico’s economic growth forecast for 2026. Originally expecting a 1.5% growth rate, analysts now anticipate only 1.2%. However, the forecast for 2025 remains unchanged at 0.1%, as per the latest Encuesta de Expectativas Citi México.
Interest Rate Cut Anticipation
According to the survey, analysts expect Banco de México to announce a 50 basis points reduction in its interest rate to 8.0% on Thursday. Out of the 33 participants, 31 anticipate a 50 basis points cut, while two expect a 25 basis points reduction.
Interest 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%.
Mexican Peso Outlook Improvement
The survey indicates that analysts have improved their outlook for the Mexican peso in 2025 and 2026. They now expect the exchange rate to close 2025 at 20.20 pesos per dollar, a decrease of 30 centavos from their previous forecast (20.50 pesos). For the end of 2026, they project a rate of 20.70 pesos per dollar, down from the earlier projection of 20.90 pesos.
Inflation Expectations
The survey’s consensus kept the general inflation forecast for the end of 2025 steady at 3.90%, but increased the subyacente inflation (excluding volatile items like food and energy) from 3.90% to 3.95%. For the end of 2026, their inflation projections remain unchanged at 3.75% for general inflation and 3.70% for subyacente inflation.
Annual Inflation Average Expectations
The median expected annual average inflation rate for the period 2027-2031 stayed constant at 3.70%, as per the survey.
Short-term Inflation Projections
For the first half of June, analysts project a general and subyacente inflation rate of 0.12% and 0.17%, respectively. For the entire month of June, they anticipate a general inflation rate of 0.26% monthly or 4.30% interannual, which is lower than May’s rate of 4.42%.
Key Questions and Answers
- What is the main reason for the revised growth forecast? The primary factor behind the downward revision in Mexico’s 2026 growth forecast is a combination of global economic uncertainties and domestic challenges, including supply chain disruptions, elevated inflation, and tighter monetary policies.
- Who are the key participants in this survey? The Citi Mexico Survey gathers insights from 33 prominent financial analysts who closely monitor and forecast Mexico’s economic trends.
- What is the expected impact of the interest rate cut by Banco de México? The analysts anticipate that the interest rate cut will help mitigate inflationary pressures and support economic growth, albeit with potential risks to financial stability.
- How do analysts expect the Mexican peso to perform? An improved outlook for the Mexican peso reflects analysts’ confidence in the country’s economic resilience and policy adjustments.
- What are the projected inflation rates for 2025 and 2026? Analysts expect general inflation to be around 3.90% and 3.75% for 2025 and 2026, respectively. Subyacente inflation is projected at 3.95% for 2025 and 3.70% for 2026.
