Countries › Mexico › Guide › 2. Macro and country context › Mexico's economy at a glance: the rules behind rates, inflation, the peso and the budget

Mexico's economy at a glance: the rules behind rates, inflation, the peso and the budget

Last verified: 2026-10-25 · Status: Changing

Mexico pairs an autonomous central bank with a constitutional price stability mandate, a 3 percent inflation target, a peso whose official FIX rate is set by Banxico and published in the Diario Oficial, and a budget law that requires Congress to approve every year how much the federal government may borrow. In October 2026 the policy rate stands at 6.50 percent, headline inflation at 3.62 percent, real GDP grew 1.9 percent a year in the second quarter, and the 2027 budget proposal targets a public sector deficit (RFSP) of 3.9 percent of GDP. The USMCA, Mexico's main market access treaty, stays in force until 2036 and moved to annual joint reviews after the July 2026 review.

USD figures use the FIX exchange rate of MXN 18.4930 per US dollar that Banco de México published for 16 October 2026, the most recent FIX figure verified for this page. Conversions are for orientation only.

Key facts

Banco de México target for the overnight interbank interest rate	6.50 %Anuncio de Política Monetaria, 24 September 2026; Ley del Banco de México art. 2, as of 2026-09-24 · in force
Central bank inflation target (annual INPC change), with a variability interval of plus or minus 1 point	3 %Programa Monetario 2026, Banco de México, as of 2026-01-01 · in force
Headline consumer price inflation, annual, first half of October 2026	3.62 %INEGI Boletín de Indicador 633/26 (INPC), as of 2026-10-22 · in force
Core consumer price inflation, annual, first half of October 2026	3.78 %INEGI Boletín de Indicador 633/26 (INPC), as of 2026-10-22 · in force
Real GDP growth, second quarter 2026 versus second quarter 2025, seasonally adjusted	1.9 %INEGI, PIB Trimestral, precios constantes, second quarter 2026, as of 2026-08-24 · in force
Real GDP growth, second quarter 2026 versus first quarter 2026, seasonally adjusted	1.4 %INEGI, PIB Trimestral, precios constantes, second quarter 2026, as of 2026-08-24 · in force
Nominal GDP at current prices, second quarter 2026 (INEGI figure)	37530380 MXN millionINEGI, PIB Trimestral, precios corrientes, second quarter 2026, as of 2026-08-24 · in force
Unemployment rate, share of the economically active population, August 2026	3.0 %INEGI Boletín de Indicador 606/26 (ENOE), as of 2026-08-31 · in force
Labor informality rate (TIL 1), share of employed population, August 2026	55.0 %INEGI Boletín de Indicador 606/26 (ENOE), as of 2026-08-31 · in force
FIX exchange rate, pesos per US dollar, 16 October 2026	18.4930 MXN per USDBanxico FIX rules, DOF 22 March 1996, as of 2026-10-16 · in force
Public sector borrowing requirements (RFSP) target for 2027, share of GDP (budget proposal)	3.9 % of GDPPaquete Económico 2027, SHCP Comunicado No. 71; LFPRH art. 17, as of 2026-09-08 · pending
Historical balance of public sector borrowing requirements (SHRFSP), projected end of 2027, share of GDP	55.0 % of GDPCriterios Generales de Política Económica 2027, as of 2026-09-08 · pending
Federal government net domestic borrowing ceiling, fiscal year 2026	1780000 MXN millionLey de Ingresos de la Federación 2026 art. 2, DOF 7 November 2025, as of 2026-01-01 · in force
Federal government net external borrowing ceiling, fiscal year 2026	15500 USD millionLey de Ingresos de la Federación 2026 art. 2, DOF 7 November 2025, as of 2026-01-01 · in force
Finance Ministry real GDP growth range for 2027 (budget assumption)	1.5 to 2.5 %Criterios Generales de Política Económica 2027, as of 2026-09-08 · pending
Year the USMCA stays in force until, after the July 2026 joint review moved to annual reviews	2036 yearUSMCA art. 34.7; DOF 29 June 2020, as of 2026-07-01 · in force

The rule

1. An autonomous central bank with one priority. The Constitution gives Mexico a central bank that is autonomous in its functions and administration. Its priority objective is to keep the national currency's purchasing power stable, and no authority may order it to grant financing. Board members are appointed by the President with Senate approval (or approval by the Permanent Commission), for terms designed to protect that autonomy.
Cost to do it: No cost to the investor. The practical effect is that the government cannot have Banxico print money to fund the budget, which supports the value of peso assets.
Example: A company holding MXN 10,000,000 in peso deposits relies on this mandate: the central bank, not the Treasury, decides the interest rate that protects that balance from inflation. / MXN 10,000,000 is about USD 540,745.Decreto por el que se reforman los artículos 28, 73 y 123 de la Constitución Política de los Estados Unidos Mexicanos, DOF 20 August 1993, Constitution art. 28, sixth and seventh paragraphs (added by the 1993 decree), 1993-08-20 official text · verified 2026-10-25

2. The mandate in the Banxico Law and the 3 percent target. Banco de México's purpose is to supply the economy with national currency, with the priority objective of keeping its purchasing power stable; it must also promote the sound development of the financial system and the proper functioning of payment systems. Banxico has run an inflation targeting regime since 2001, with a permanent target of 3 percent annual change in the consumer price index (INPC) set in 2003 and a variability interval of plus or minus one percentage point, which Banxico says is not a tolerance margin. Its Governing Board sets the target for the overnight interbank interest rate: on 24 September 2026 it unanimously held it at 6.50 percent.
Cost to do it: No fee. The cost is the price of money: peso borrowing costs and deposit yields track the 6.50 percent target, against headline inflation of 3.62 percent in the first half of October 2026.
Example: If MXN 10,000,000 of working capital earned the 6.50 percent policy rate for a year, it would earn about MXN 650,000 before tax. Inflation running at 3.62 percent would erode about MXN 362,000 of purchasing power, leaving a real gain of about MXN 288,000. Actual bank deposit rates are usually below the policy rate. / About USD 35,148 nominal interest, USD 19,575 lost to inflation, and USD 15,573 real gain on a USD 540,745 balance.Ley del Banco de México, DOF 23 December 1993 (Chamber of Deputies consolidated text); Programa Monetario 2026, Banco de México; Anuncio de Política Monetaria of 24 September 2026, Ley del Banco de México art. 2; Programa Monetario 2026, inflation target section, 1993-12-23 official text · verified 2026-10-25 · changed: On 7 May 2026 Banxico cut the target rate by 25 basis points to 6.50 percent and described the move as closing the easing cycle that began in March 2024. It then held at 6.50 percent on 25 June, 6 August and 24 September 2026. The 24 September statement said Mexican policy does not have to react mechanically to US Federal Reserve moves.

3. Who sets exchange rate policy, and the FIX. Banxico must act on foreign exchange matters according to guidelines set by the Foreign Exchange Commission (Comisión de Cambios). Its members are the Secretary and an Undersecretary of Finance (SHCP), another SHCP undersecretary, the Banxico Governor and two Governing Board members the Governor designates, with no alternates. Banxico determines the FIX exchange rate every banking business day, announces it from 12:00, and publishes it in the Diario Oficial de la Federación (DOF) one banking business day later. The published rate is the one used to settle obligations in US dollars payable in Mexico on the day after publication.
Cost to do it: No fee to use the FIX; contracts that name it avoid disputes over which rate applies.
Example: A Mexican customer owing USD 100,000 under a contract payable in Mexico that refers to the FIX would have paid MXN 1,849,300 at the FIX of 16 October 2026 (MXN 18.4930), on the day after that rate's DOF publication. / USD 100,000.Ley del Banco de México, DOF 23 December 1993; Disposiciones aplicables a la determinación del tipo de cambio para solventar obligaciones denominadas en moneda extranjera pagaderas en la República Mexicana, Banco de México, DOF 22 March 1996, Ley del Banco de México art. 21; Banxico FIX rules (whole instrument), 1996-03-22 official text · verified 2026-10-25

4. The balanced budget rule and the deficit target. Total net spending proposed by the Executive, approved by the Chamber of Deputies and executed during the year must contribute to budget balance. For economic and social reasons the Revenue Law and Budget initiatives may plan a deficit, but the Executive must then state the financing needed, the exceptional reasons and the number of years and actions needed to restore balance. Revenue and spending must also meet an annual target for the public sector's broad borrowing requirements (RFSP). Under the regulation, spending counts as contributing to balance when the absolute budget deficit is below 0.75 percent of approved net spending, and the RFSP target is consistent when it keeps the debt stock (SHRFSP) constant or falling as a share of GDP in the medium term.
Cost to do it: No direct cost. A credible deficit path is what keeps sovereign borrowing costs, and with them the cost of peso credit for companies, in check.
Example: In the 2027 package the SHCP projects tax revenue at 15.9 percent of GDP, which it calls a historic high, without new taxes. / Not applicable; the targets are set as shares of GDP.Ley Federal de Presupuesto y Responsabilidad Hacendaria (LFPRH), DOF 30 March 2006, last reform DOF 9 April 2026; Reglamento de la LFPRH, DOF 28 June 2006, last reform DOF 8 August 2025, LFPRH art. 17; Regulation provisions implementing art. 17, 2006-03-30 official text · verified 2026-10-25 · changed: The 2027 Economic Package, delivered to Congress on 8 September 2026, targets RFSP of 3.9 percent of GDP for 2027 (1.8 points below 2024), after a 2026 target of 4.1 percent, with the SHRFSP debt stock projected at 55.0 percent of GDP at the end of 2027.

5. Congress caps federal borrowing every year. The annual Federal Revenue Law authorizes the Executive, through the SHCP, to borrow to finance the year's budget up to a net ceiling. For 2026 the ceiling on net domestic borrowing for the federal government is MXN 1,780,000 million (1.78 trillion pesos) and net external borrowing up to USD 15,500 million, including borrowing from international financial institutions. The same article sets separate ceilings for Petróleos Mexicanos (net domestic up to MXN 160,619.6 million, net external up to USD 5,342.1 million) and the Federal Electricity Commission (net domestic up to MXN 8,764.2 million, net external up to USD 969.0 million).
Cost to do it: No cost to investors; the ceiling limits how much new government paper reaches the market.
Example: 2026 net domestic ceiling: MXN 1,780,000,000,000. 2027 ceiling approved by the Deputies, pending in the Senate: MXN 1,700,000,000,000. / About USD 96.3 billion for 2026 and USD 91.9 billion for the 2027 proposal, plus the separate external ceilings stated in dollars.Ley de Ingresos de la Federación para el Ejercicio Fiscal de 2026, DOF 7 November 2025, in force 1 January 2026, Art. 2, 2025-11-07 official text · verified 2026-10-25 · changed: Pending: the Chamber of Deputies approved the 2027 Federal Revenue Law in October 2026 (331 votes in favor and 118 against in general) with a net domestic borrowing ceiling of MXN 1.7 trillion and net external borrowing of up to USD 13,500 million, and sent it to the Senate. It is not law until the Senate approves it and it is published in the DOF.

6. USMCA term and reviews. The USMCA (T-MEC in Mexico) replaced NAFTA and entered into force for Mexico on 1 July 2020 for an initial term of 16 years. On the sixth anniversary the Free Trade Commission meets for a joint review. If any party does not confirm in writing that it wants a new 16 year term, the Commission meets every year for the rest of the term, and the parties may extend at any time before expiry. At the fifth Free Trade Commission meeting on 1 July 2026, Mexico, the United States and Canada agreed to hold annual reviews; the treaty continues in force until 2036, and any annual review can extend it for another 16 years.
Cost to do it: No fee. Goods must meet the USMCA rules of origin to claim preferential treatment.
Example: Long term contracts and plant financing for export to the United States should model the treaty's fixed end date of 2036 unless an annual review extends it. / The Ministry of Economy said Mexico will continue to export more than 80 percent of its products to the United States without paying tariffs.Decreto Promulgatorio del Protocolo por el que se sustituye el Tratado de Libre Comercio de América del Norte por el Tratado entre los Estados Unidos Mexicanos, los Estados Unidos de América y Canadá, DOF 29 June 2020, USMCA art. 34.7 (Review and Term Extension), paragraphs 1 to 4, 2020-06-29 official text · verified 2026-10-25 · changed: 1 July 2026: the joint review ended without an immediate 16 year extension; the parties moved to annual reviews with the treaty in force until 2036 (Ministry of Economy statement on the fifth Free Trade Commission meeting).

Indicator	Value	Period	Official source
Policy rate (overnight interbank target)	6.50%	Decision of 24 September 2026	Banco de México
Headline inflation, annual	3.62%	First half of October 2026	INEGI, bulletin 633/26
Core inflation, annual	3.78%	First half of October 2026	INEGI, bulletin 633/26
Inflation target	3% plus or minus 1 point	Permanent since 2003	Banco de México, Programa Monetario 2026
Real GDP growth	1.4% quarterly, 1.9% annual	Second quarter 2026, seasonally adjusted	INEGI
Nominal GDP	MXN 37.53 trillion (about USD 2.03 trillion)	Second quarter 2026	INEGI
Unemployment rate	3.0%	August 2026	INEGI, ENOE bulletin 606/26
Labor informality rate	55.0%	August 2026	INEGI, ENOE bulletin 606/26
FIX exchange rate	MXN 18.4930 per USD	16 October 2026	Banco de México

Mexico macro dashboard, latest official figures verified 25 October 2026. USD at the FIX of MXN 18.4930 (16 October 2026).

Item	2026	2027	Source
RFSP (broad public deficit), share of GDP	4.1% (target)	3.9% (proposed target)	CGPE 2026; SHCP Comunicado No. 71
SHRFSP (broad public debt), share of GDP	52.3% (CGPE 2026 estimate)	55.0% (CGPE 2027 projection)	CGPE 2026; CGPE 2027
Federal net domestic borrowing ceiling	MXN 1.78 trillion (in force)	MXN 1.7 trillion (approved by the Deputies, pending in the Senate)	LIF 2026 art. 2; Canal del Congreso
Federal net external borrowing ceiling	USD 15,500 million (in force)	USD 13,500 million (approved by the Deputies, pending in the Senate)	LIF 2026 art. 2; Canal del Congreso
Real GDP growth assumption	Not shown	1.5% to 2.5%	CGPE 2027
Exchange rate assumption	Not shown	MXN 18.4 per USD average, MXN 18.0 at year end (a reference for public finance projections, not a forecast)	CGPE 2027
Inflation at year end	Not shown	3.0%	CGPE 2027

Budget framework: 2026 in force versus the 2027 package (proposal delivered 8 September 2026; the 2027 Revenue Law is pending in the Senate).

Date	Decision	Target rate after decision
7 May 2026	Cut of 25 basis points, described as closing the easing cycle that began in March 2024	6.50%
25 June 2026	Hold	6.50%
6 August 2026	Hold, unanimous	6.50%
24 September 2026	Hold, unanimous	6.50%

Banco de México target rate decisions in 2026 that are verified for this page.

Worked example

A foreign parent funds a Mexican subsidiary with USD 10,000,000 and converts it at the FIX of MXN 18.4930 (16 October 2026), receiving MXN 184,930,000.
The subsidiary keeps MXN 10,000,000 as a peso cash buffer. If it earned the policy rate of 6.50 percent for a year it would collect about MXN 650,000 (about USD 35,148). Headline inflation of 3.62 percent would cost about MXN 362,000 of purchasing power, leaving a real gain of about MXN 288,000 (about USD 15,573). Actual deposit rates are usually lower, so check your bank's offer.
For 2027 budgeting it uses the Finance Ministry's public finance references: inflation of 3.0 percent at year end and an average of MXN 18.4 per USD. A peso cost base of MXN 100,000,000 equals about USD 5.43 million at 18.4 and about USD 5.41 million at the 16 October FIX. The CGPE says its exchange rate figure is a reference for projections, not a forecast, so the group stress tests a range.
Its US customer contracts run to at least 2030. Because the USMCA now has annual reviews and runs until 2036 unless extended (art. 34.7), the group adds a review clause tied to changes in USMCA preferential treatment.

Step by step

1. Track the central bank calendar: Banxico's Governing Board decides the target rate on scheduled dates announced in advance, and peso funding costs move with each decision.
2. Read the INEGI consumer price bulletin every half month (the next is due 24 November 2026) and compare it to the 3 percent target and its 2 to 4 percent interval.
3. When you sign contracts in dollars payable in Mexico, name the FIX published in the DOF as the conversion rate, and remember it applies the day after publication.
4. Each September, read the Economic Package (CGPE, Revenue Law and Budget initiatives) for the deficit target, borrowing ceilings, and the growth, inflation and exchange rate assumptions, then follow the Revenue Law until it is published in the DOF.
5. Treat figures from the Pre-Criterios (April) as provisional; the final CGPE (September) and the Revenue Law published in the DOF are what count.
6. For exporters, calendar the USMCA annual reviews and model the 2036 end date in long term plans.

Common traps

Reading the 2 to 4 percent band as a tolerance zone. Banxico says the variability interval is not a tolerance margin; it still aims at 3 percent, so a reading inside the band does not by itself mean rates will fall.
Assuming Banxico follows the Fed. The 24 September 2026 statement says Mexican policy does not have to react mechanically to US federal funds moves.
Citing a budget proposal as law. The 2027 borrowing ceilings were approved only by the Chamber of Deputies in October 2026 and are pending in the Senate; only the Revenue Law published in the DOF binds.
Using the CGPE exchange rate as a forecast. The Finance Ministry says its MXN 18.0 per USD end 2027 figure is a reference for public finance projections, not a forecast.
Taking the early GDP estimate as final. INEGI's early estimate for the second quarter of 2026 (2.1 percent annual) was revised to 1.9 percent in the full release, and later revisions are possible.
Looking only at the federal deficit. The broad RFSP measure includes requirements outside the budget, so it can differ from the federal government balance; use RFSP and SHRFSP when comparing years.
Assuming the USMCA was renewed for 16 years. The July 2026 review moved to annual reviews; the treaty runs until 2036 unless the parties extend it in a later review.

Sources

← Start here: the legal gateways every foreign investor crosses in Mexico