Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-02-27
Miran anticipates that the Federal Reserve will implement four interest rate cuts in the United States during the current year. This prediction comes amid ongoing discussions about monetary policy and its impact on the economy. — El Economista, 27 Feb 2026. Read more
Banxico, led by Governor Victoria Rodríguez Ceja, has introduced a new proposal regarding payment regulations that will be discussed and consensuated with relevant stakeholders. The initiative aims to enhance the efficiency and security of payment systems in Mexico, reflecting ongoing efforts to modernize financial infrastructure. — El Economista, 26 Feb 2026. Read more
Banxico has increased its GDP forecast for Mexico to 1.6%. The central bank, led by Governor Victoria Rodríguez Ceja, noted that the impact of the Special Tax on Production and Services (IEPS) on inflation is expected to be limited. — El Economista, 26 Feb 2026. Read more
Banxico, under the leadership of Governor Victoria Rodríguez Ceja, has increased its growth forecast for Mexico to 1.6% for the year 2026. This adjustment reflects the central bank's updated economic outlook amid changing conditions. — El Financiero, 26 Feb 2026. Read more
The CNBV is advancing the Ley 2.0 to support the fintech sector, which has garnered regulatory backing. Additionally, Banxico, led by Governor Victoria Rodríguez Ceja, is observing a greater influence of fintech in the financial landscape. This development indicates a shift towards more robust regulation and oversight in the fintech industry. — El Economista, 26 Feb 2026. Read more
The Mexican peso has depreciated against the US dollar, although the decline was moderated following the release of Banxico's quarterly report. Victoria Rodríguez Ceja, the Governor of Banxico, provided insights into the current economic situation, which influenced market reactions. The report's details contributed to a temporary stabilization of the peso's value. — El Economista, 26 Feb 2026. Read more
The Mexican peso closed lower against the dollar, reflecting ongoing concerns about the currency's performance. Analysts noted that the peso's depreciation is attributed to various economic factors, including market sentiment and external pressures. The article emphasizes the need for monitoring the peso's trajectory in light of these developments. — El Financiero, 26 Feb 2026. Read more
The Mexican peso reversed its initial decline and gained ground against the US dollar. This recovery comes amid ongoing economic adjustments and market reactions. The article highlights the peso's performance without providing specific figures or rates. — El Economista, 24 Feb 2026. Read more
The Mexican peso has depreciated against the dollar following local inflation data that exceeded expectations. This development comes as the market reacts to the implications of higher inflation on monetary policy and economic stability in Mexico. — El Economista, 24 Feb 2026. Read more
The Mexican peso has depreciated against the US dollar following a tense weekend in Mexico. The decline reflects ongoing concerns in the market, although specific figures regarding the exchange rate were not provided. Analysts are closely monitoring the situation as it unfolds. — El Economista, 23 Feb 2026. Read more
Bank of Mexico Raises Forecast for 2026 Economic Growth — Google News, 26 Feb 2026. Read more
High NEET Rates Threaten Economic Growth, Future Leaders — Google News, 26 Feb 2026. Read more
Banxico Optimistic but Cautious Amid Global Trade Tensions — Google News, 26 Feb 2026. Read more
Bank of Mexico edges up 2026 economic growth forecast but flags risks — Google News, 26 Feb 2026. Read more
Bank of Mexico Boosts Economic Growth and Inflation Forecasts — Google News, 26 Feb 2026. Read more
Dayton districts export $3.7B combined as Canada, Mexico trade looms large — Google News, 26 Feb 2026. Read more
Trump’s 10% global tariff starts, USMCA exempts Mexico — Google News, 25 Feb 2026. Read more
Mexico’s FDI Hits Record US$40.8 Billion Amid Tariff Risks — Google News, 25 Feb 2026. Read more
Banxico Has Room for More Interest Rate Cuts, Deputy Governor Says — Google News, 25 Feb 2026. Read more
Iowa postpones trade mission to Mexico due to unrest — Google News, 25 Feb 2026. Read more
Updated: 2026-02-07 by Alexander Dentler
Key Takeaways
Following the December 18, 2025 decision, Banxico's policy rate stands at 7.00%, reflecting a recent cut of 0.25 percentage points. After Banxico's December meeting, the target rate has been held steady at 7.00%, following a cumulative reduction of 0.50 percentage points since the last hike in March 2023. The recent cut represents a strategic response to evolving economic conditions, characterized by lingering uncertainties surrounding both domestic and external factors. As Banxico prepares for its next meeting in 47 days, the focus remains on adapting to the shifting landscape of economic pressures and inflationary expectations.
The Fed's target rate currently stands at 3.62%, following a similar cut of 0.25 percentage points in December. Relative to the United States, Banxico's more aggressive rate stance reflects a proactive approach to managing inflation and economic stability amidst heightened global economic uncertainties. The recent coordination in rate cuts illustrates a shared concern over external economic conditions, yet the substantial rate differential signals diverging monetary policy paths. This dynamic places Banxico in a unique position to leverage policy tools more autonomously, especially as it navigates domestic challenges.
The rate differential is likely to influence capital flows and currency stability in the region. For markets, the significant rate differential could enhance Mexico's appeal to investors, potentially supporting capital inflows. Nonetheless, the heightened concerns surrounding rule of law and security suggest that such advantages may be offset by risks that could deter long-term investment. As Banxico maneuvers through these complexities, the interplay between rate policy and economic fundamentals will remain critical.
The central bank's policy rate is the primary tool for steering inflation and economic activity. Banxico targets 3% annual inflation and adjusts its overnight interbank rate to influence borrowing costs throughout the economy. The rate differential with the United States affects capital flows and exchange rate dynamics — a wider spread can attract foreign investment but may constrain domestic credit. Policy decisions are announced roughly every six weeks following scheduled monetary policy meetings.
Updated: 2026-02-27 by Alexander Dentler
Key Takeaways
With new insights from the latest data cycle, the outlook for Banxico's upcoming monetary policy decision is evolving. Our model-based expectations suggest a substantial chance of no action at the next meeting on February 5, 2026, where the expected change is currently -11bp. The hold probability stands at about 58%, indicating a preference for inaction amid prevailing uncertainties. The modal bucket has shifted to ±0bp, reflecting a growing consensus around maintaining the current rate, while a significant portion, approximately 38.9%, still anticipates a modest 25bp cut. This marks a material shift from our previous assessment, underscoring the complexity of the current economic landscape.
Recent data updates have provided fresh insights into the economic indicators shaping policy decisions. Key variables such as inflation rates and economic policy uncertainty have received new observations since the last update; however, material changes remain limited. Overall, these data points reinforce the existing trend without drastic revisions to our previous outlook.
The interplay of economic drivers continues to shape the policy landscape, with notable influences emerging. Current conditions exhibit a slight dovish pull primarily influenced by declining headline inflation, while concerns over economic policy uncertainty persist as a significant negative driver. The committee must navigate these tensions carefully, balancing the need for stimulus against structural deficiencies that could threaten broader stability. It is essential to note that while the model highlights these drivers, the actual decision will ultimately depend on the committee's judgment and broader economic assessments.
Ordered Probit Probabilities
| Rate Change | 04 Feb | 05 Feb 2026 | Δ |
|---|---|---|---|
| Cut | 58.4% | 42.0% | -16.4 |
| Hold | 41.6% | 58.0% | +16.4 |
| Hike | 0.0% | 0.0% | +0.0 |
| E[Δrate] | -17.5 bp | -11.3 bp | +6.2 bp |
Probabilities in %. Modal bin in bold. E[Δrate] = probability-weighted expected change in basis points.
When markets and the public can anticipate how and why the central bank acts, uncertainty falls and policy becomes more effective. Clear communication helps businesses plan investments, households make borrowing decisions, and international investors gauge currency risks. Economists often stress the importance of clarity and traceability — the ability to follow and understand decisions step by step. Without it, rate moves risk being misread, causing volatility instead of stability. With it, policy signals are more credible, anchoring expectations and strengthening the central bank's influence.
Rate-change probabilities are estimated using an ordered probit model with eight macroeconomic and financial drivers: consumer price inflation (CPI), consumer confidence, the 30-day peso/dollar change, the CETES 28-day spread, stock market growth, the yield curve slope (10Y minus 2Y), Mexico's Economic Policy Uncertainty index, and the Fed-Banxico rate differential. The model maps these drivers into probability bins for the next monetary policy decision, ranging from cuts of 50 basis points or more to hikes of the same magnitude. Coefficients are estimated on the historical record of Banxico decisions and their pre-decision data environment. Probabilities update daily as driver series refresh and should be treated as one input among many.
Out-of-sample backtest across 24 past meetings: the modal prediction matched the actual decision 46% of the time, directional accuracy (hike/hold/cut) was 67%, Brier score 0.720. Out-of-sample backtest across 24 past meetings: the modal prediction matched the actual decision 46% of the time, directional accuracy (hike/hold/cut) was 67%, Brier score 0.720. Lower Brier scores indicate better-calibrated probability forecasts.
Updated: 2026-02-27 by Alexander Dentler
Key Takeaways
Bond prices as of 2026-02-27 show the 10Y-3Y spread at 1.48%, reflecting a notable increase of 0.23% from the previous observation. The latest yield curve data reveals that the nominal spread has risen to 1.48%, while the real spread stands at 0.54%. Notably, the implied inflation spread is at 0.94%, suggesting that market participants anticipate stable inflationary conditions ahead. As the nominal spread remains within a normal range, it indicates a healthy risk appetite, despite the recent uptick in spreads reflecting potential economic uncertainties.
The curve shape suggests a market alignment with expectations of a potential interest rate cut from Banxico. Markets appear to be pricing in a 60% probability of a 22 basis point reduction at the upcoming meeting, which aligns with the recent increase in the nominal spread. However, the cautious stance of the committee, as expressed in the latest minutes, indicates a potential disconnect between market signals and policy consensus, particularly regarding the ongoing concerns about inflation and economic activity.
Yield Spread Update
| Spread (10Y−3Y) | 25 Feb | 26 Feb 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.49 | 1.48 | -0.007 | 1.19 |
| Real | 0.50 | 0.54 | +0.040 | 0.90 |
| Inflation | 0.99 | 0.94 | -0.047 | 0.29 |
All values in percentage points. NS-DFM = Nelson-Siegel Dynamic Factor Model filtered estimate.
When investors and businesses trust that monetary policy will remain credible and predictable, long-term interest rates respond more smoothly to central bank signals. Yield curve spreads between long and short maturities serve as a real-time gauge of this alignment: a stable, upward-sloping curve suggests markets expect gradual normalization, while persistent inversions often signal that markets anticipate policy shifts before they are announced. For Mexico, where inflation targeting depends on anchoring expectations across a diverse investor base, the 10-year minus 3-year spread offers a compact summary of whether policy communication is landing as intended.
Yield curve spreads are filtered using a Nelson-Siegel Dynamic Factor Model (NS-DFM) estimated on weekly data. The model ingests 16 synthetic yield curve points — 11 nominal maturities (overnight through 30 years) and 5 real maturities (overnight through 30 years) — fitted via Nelder-Mead optimization on Banxico bond prices. Factor loadings follow the Diebold-Li (2006) Nelson-Siegel parameterization, decomposing each yield curve into level, slope, and curvature components for both real rates and implied inflation. The Kalman smoother extracts filtered spread estimates that track the underlying signal in daily bond market noise.
So…what is this—and why am I doing it?
This project began with a simple question in 2021: how much of the work of producing useful economic information can we hand over to machines? Monitoring Monetary Policy in Mexico is a thought experiment at that frontier. By combining statistical analysis, tailored visualizations, and large language models, it demonstrates how even highly specialized topics—such as Mexican monetary policy—can be made more accessible, relevant, and insightful. Meanwhile, the system is designed to run without human intervention on a daily basis. My role is to set the design; the automation carries it out.
When does data stop being a dump and start being a story?
The initiative builds on my earlier Monitoring Mexico project but has since evolved in important ways. Data is no longer simply displayed; it is analyzed, distilled, forecasted, visualized, interpreted, narrated, and contextualized. Large language models help transform both raw and modeled data into context, turning numbers into stories. In short, raw information is transformed into understanding.
Who’s in charge here—a Raspberry Pi or common sense?
Behind the scenes, the site runs on a Raspberry Pi 5 powered by Python and a library of custom routines. Automation drives much of the process, but human expertise remains essential in designing the explanation and presenting the material. The balance between machine efficiency and human judgment is what makes the project work.
How do we cut through the jargon and keep the signal?
The aim is straightforward: to bring clarity to an area often obscured by technical detail. Monetary policy shapes households, firms, and markets, yet its analysis usually remains confined to experts. By filtering, explaining, and visualizing the data, this project seeks to make that knowledge more transparent and more useful.
Is this the 80/20 rule you learn in business school in the wild?
At its core, the site is both a contribution to public understanding and an exploration of how informational value is created. It is a humble attempt to deliver 80% of the insights of a central bank analysis with 20% of the resources—while also testing what the future of knowledge generation might look like.
What might be new the next time you drop by?
This is very much a work in progress, with new features, analyses, and visualizations added over time. We can now at the brink of generating our very own economic policy uncertainty (EPU) index, and we consider a newsletter. But maybe a chatbot might be more appropriate? Coming back to check for updates is always a good idea. If the site sparks curiosity, fosters dialogue, or simply helps illuminate Mexico’s economic dynamics, it has achieved its goal.
Updated: 2026-02-27 by Alexander Dentler
Key Takeaways
The mid-February 2026 CPI release shows headline inflation at 3.89%, comfortably within Banxico's target band of 2%-4%. The mid-February 2026 CPI release shows headline inflation at 3.89%, placing it at the 42nd percentile and well within Banxico's target band. This represents a slight increase of 0.04% compared to the previous observation, indicating a modest upward trend in price levels. This development suggests that while inflation remains manageable, the trajectory requires close monitoring, especially as the committee weighs potential interest rate adjustments in light of current economic conditions.
Core inflation, which excludes volatile food and energy prices, remains elevated at 4.55%, reflecting persistent underlying price pressures. Core inflation, which excludes volatile components, stands at 4.55%, notably higher than headline inflation. This figure, at the 77th percentile, shows a slight decrease of 0.02% from the previous month, indicating that core inflation is still diverging from the 3% target. The continued elevation of core inflation suggests that inflationary pressures are more entrenched, which could complicate Banxico's policy calculus as they consider future rate cuts amid an uncertain economic landscape.
Trade prices reflect a complex interplay of domestic and global market factors, with export prices showing notable growth. Trade prices indicate a dynamic environment, with export prices increasing significantly to 7.05%, marking a 1.15% rise from the previous month. This robust growth in export prices, at the 67th percentile, may signal increased demand or pressures from global markets, which could have downstream effects on domestic inflation. Conversely, import prices are comparatively stable at 2.30%, suggesting that while external pressures exist, they are not uniformly affecting all sectors.
| 1H Feb 2026 | 1H Feb 2027 | |||||
|---|---|---|---|---|---|---|
| Series | Current | Prev. Fcast | Error | 12M Fcast | Prev. 12M | Rev. |
| Headline CPI | 3.9 | — | — | 4.3 | 4.3 | +0.00 |
| Core CPI | 4.6 | — | — | 4.0 | 4.0 | +0.00 |
| Export Price Index | — | — | — | 3.8 | 3.8 | +0.00 |
| Import Price Index | — | — | — | 3.0 | 3.0 | +0.00 |
All values in percentage points (YoY, seasonally adjusted). "Error" = actual minus previous forecast. "Revision" = change in 12-month outlook since last update. "—" = no prior forecast available.
The Consumer Price Index (CPI) measures changes in the cost of a representative basket of goods and services purchased by Mexican households. Banxico targets 3% annual inflation with a tolerance band of 2%-4%. Core CPI — which excludes volatile food and energy prices — reveals underlying inflation trends that guide monetary policy. Import and export price indices extend the picture by linking Mexico's inflation dynamics to global markets, trade flows, and currency movements.
Headline CPI, core CPI, export prices, and import prices are projected six months ahead using a Vector Autoregression (VAR). The four series are estimated jointly, so each informs the others' forecasts through lagged interactions. Projections update each time new CPI data arrive and may shift materially after revisions.
Out-of-sample backtest over 62 evaluation windows using the Vector Autoregression (VAR). Out-of-sample backtest over 62 evaluation windows using the Vector Autoregression (VAR). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Headline CPI (RMSE 1.15 vs 1.08 naive, n=62); Core CPI (RMSE 0.67 vs 1.13 naive, +40% improvement, n=62); Export Price Inflation (RMSE 7.27 vs 7.77 naive, +6% improvement, n=56); Import Price Inflation (RMSE 2.99 vs 2.05 naive, n=56).
Updated: 2026-02-06 by Jorge Martínez
Key Takeaways
The latest SHF House Price Index for Q3 2025 reveals a YoY inflation rate of 8.86%, which is about as spicy as a taco on a hot summer day. This inflation rate, reported on July 1, 2025, is comfortably above the historical average, strutting in at the 79th percentile since 2006. In the same breath, house price inflation is outpacing both the headline CPI at 3.69% and the housing CPI at 3.35%, creating a premium of over 5 percentage points in each case. Meanwhile, the DFM nowcast suggests a slight divergence from this observed rate, but let's not throw a piñata just yet; we’ll dig into that shortly.
Now, let’s unravel the mystery of the DFM nowcast, which brings some intriguing twists to our house price saga. The DFM nowcast, standing at 7.29% as of January 1, 2026, is lower than the observed 8.86%, indicating that the model detects downward pressure from auxiliary indicators like mortgage lending and CPI housing. This suggests that while house prices have been on a rollercoaster of inflation, the underlying trend is showing signs of mean reversion or cooling off, which could have implications for those still clinging to the idea of a housing bonanza. In short, the DFM is waving a caution flag, reminding us that even the hottest markets can cool down faster than a soggy tortilla.
Housing is a major household asset and a key store of wealth. Rising prices can lift balance sheets and collateral values, while falling prices can weaken credit conditions and confidence. Housing costs also shape the cost of living and affordability, making house price inflation relevant for both growth and distributional pressures in Mexico.
Updated: 2026-01-23
Key Takeaways
Brent oil prices through December 2025 reveal a disconcerting tale, settling at $61.81, a staggering 15.6% decline year-over-year. Brent oil prices through December 2025 reveal a disconcerting tale, settling at $61.81, a staggering 15.6% decline year-over-year. This downward trajectory, exacerbated by global supply chain disruptions and fluctuating demand, has cast a pall over Mexico's federal revenues, which hinge significantly on oil exports. With a three-day streak of decline, the implications for Pemex and the Campeche regional economy are as clear as a foggy morning: uncertainty looms large.
Copper, on the other hand, shines like a beacon, currently priced at $11,790.96 and boasting a robust 32.3% increase over the past year. Copper, on the other hand, shines like a beacon, currently priced at $11,790.96 and boasting a robust 32.3% increase over the past year. This metal's recent upward momentum—evident in a 9.1% monthly increase—reflects a burgeoning demand from the tech sector and a resurgence in global infrastructure projects. For Mexico's mining sector, particularly in Sonora, this trend offers a silver lining amidst the otherwise turbulent commodity seas.
Corn prices are on a modest ascent, currently at $205.32, with a year-over-year rise of 1.2%. Corn prices are on a modest ascent, currently at $205.32, with a year-over-year rise of 1.2%. This gentle rise, marked by a 1.8% increase in the last month, paints a picture of stability in an otherwise volatile agricultural landscape. For Mexico's 1.5 million smallholder farmers, this incremental growth brings hope, but the specter of food price inflation still lurks in the shadows.
Commodity prices feed directly into Mexico's inflation pulse and terms of trade. Oil and corn affect energy and food costs, while copper is a proxy for global industrial demand. For policymakers, sharp commodity swings can shift inflation expectations and fiscal balances, making these prices critical to monitor.
Updated: 2026-02-17 by Jorge Martínez
Key Takeaways
The January 2026 IMSS release shows unit labor costs at 3.12%, indicating wages are outpacing productivity. Following January's formal sector wage data, ULC in manufacturing is rising, with a MoM decrease of 0.32 percentage points. This uptick signifies that wages are growing faster than productivity, which could stir the pot for cost-push inflation pressures down the line. At the 72nd percentile, this trend raises eyebrows about competitiveness and cost management in the sector.
Real wages in the formal sector are showing signs of improvement, with manufacturing workers enjoying a robust increase in purchasing power. With real wage growth at 5.61%, households in manufacturing are experiencing tangible benefits, as their purchasing power is on the rise. This positive shift, marked by a 1.54% MoM increase, suggests that workers are gaining ground against the rising costs of living, providing a much-needed cushion in uncertain economic times.
Across sectors, manufacturing is pulling ahead of retail when it comes to real wage dynamics. Manufacturing is outperforming retail, with real wages rising significantly while retail workers are facing a decline in purchasing power, currently at just 1.52%. This divergence highlights a troubling trend in the retail sector, where real wages have been stagnant, potentially leading to increased financial strain for households reliant on this sector.
Unit labor costs (ULC) measure the average cost of labor per unit of output — when wages grow faster than productivity, ULC rises, potentially squeezing profit margins and fueling inflation. In Mexico, where the formal sector employs roughly half the workforce, IMSS-registered wage data captures trends in the formal economy but misses the informal sector's dynamics. Real wages — nominal wages adjusted for inflation — determine household purchasing power and underpin consumer demand. For policymakers, these indicators help balance inflation control, competitiveness, and the economic welfare of Mexican workers.
Updated: 2026-02-25 by María López
Key Takeaways
Following the latest quarterly GDP release from INEGI, real GDP growth in Mexico stands at a stable 2.31%, unchanged from previous estimates. The nowcast estimate, updated with the new data release, shows that despite the economic policy uncertainty and external challenges, the GDP remains resilient, signaling a steady economic environment. This stability suggests that the fundamentals of the economy are holding firm, even amidst a landscape of mixed signals. Market participants will be keenly watching how future data might influence this trajectory.
Private consumption is estimated at 2.85%, reflecting a solid contribution to overall economic activity. Household spending continues to support growth, indicating that consumer confidence remains relatively intact despite external pressures. This robust consumption trend is a positive signal for future economic dynamics, suggesting that domestic demand may help buffer against global uncertainties.
Exports are projected to grow at 5.21%, indicating a healthy external demand environment. This growth in exports suggests that Mexico’s manufacturing sector is effectively capitalizing on opportunities in key markets, particularly the United States. A strong export performance is crucial for maintaining competitive advantage and fostering economic resilience in the face of potential trade disruptions.
Imports are currently estimated to rise by 5.37%, reflecting robust domestic demand. This increase in imports signals that consumer and business confidence is driving higher demand for goods and services, which is essential for maintaining economic momentum. It also underscores that while external demand is healthy, domestic absorption is equally significant in supporting growth.
Net trade's contribution remains neutral as both imports and exports grow in tandem. This dynamic suggests a balanced trade environment, where the increase in imports does not overshadow export gains. The stability in net trade helps reinforce the overall economic outlook, as both sides of the trade equation are aligned in their growth trajectories.
DFM GDP Nowcasts
| Component | Last Observed | Nowcast | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Real Gross Domestic Product | 1.07% | 2.31% | 2.31% | +0.00 |
| Private Consumption | 1.98% | 2.85% | 2.85% | +0.00 |
| Imports | 17.42% | 5.37% | 5.37% | +0.00 |
| Exports | 5.21% | 5.21% | 5.21% | +0.00 |
QoQ annualized, seasonally adjusted. Nowcast = DFM filtered estimate using higher-frequency inputs. "Revision" = change from previous run.
Real activity data tracks the economy's engine — output, spending, and trade — while nowcasts bridge the lag between releases. Real GDP captures total production; private consumption reflects household demand; exports and imports reveal external demand and the flow of inputs for Mexico's trade-exposed, manufacturing-heavy economy. Shifts in U.S. demand, global prices, and the peso often show up first in trade, then filter into GDP and consumption. Because official series arrive with delays and revisions, model-based nowcasts provide an early, probabilistic read for policy timing — useful if treated with uncertainty bands and cross-checked against higher-frequency signals.
A Dynamic Factor Model (DFM) nowcasts quarterly GDP and its demand components — private consumption, imports, and exports — using 14 higher-frequency inputs. These include monthly employment indicators, industrial production (IGAE), consumer confidence, capacity utilization, retail sales, and private consumption, plus quarterly GDP sector breakdowns. The model extracts common factors via the Kalman filter, updating the nowcast each time any input series receives new data. Nowcast estimates are conditional expectations that narrow as more data arrive within each quarter.
Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Real GDP (RMSE 3.90 vs 3.82 naive, n=12); Private Consumption (RMSE 5.41 vs 2.51 naive, n=12); Exports (RMSE 22.26 vs 18.28 naive, n=12); Imports (RMSE 11.34 vs 17.09 naive, +34% improvement, n=12).
Updated: 2026-02-25 by María López
Key Takeaways
The latest ENOE survey shows unemployment at a historic low, yet underemployment takes a concerning turn. The February 2026 ENOE survey shows unemployment at 3.44%, maintaining its position near the 1st percentile of historical data. This stability, however, belies a troubling rise in underemployment, which has recently advanced to 10.42%, reflecting a slight uptick from the previous reporting period. The underlying trend indicates that while unemployment remains low, the quality of jobs may be deteriorating, prompting concerns about the overall health of the labor market.
By gender, a nuanced picture emerges, revealing disparities that raise eyebrows. Male and female unemployment rates are currently reported at 3.35% and 3.54%, respectively. While both genders exhibit low unemployment levels, the marginal increase in female unemployment signals potential vulnerabilities in sectors typically dominated by women, suggesting a need for targeted policy interventions to address these disparities.
The share of informal workers is on the rise, presenting a dual-edged sword for the labor market. Informal employment has surged to 54.43%, indicating a troubling trend where more individuals are engaging in jobs without formal protections or benefits. This increase not only underscores the precariousness of many workers' situations but also highlights broader structural issues in the economy that could hinder sustainable growth and labor rights advancements.
DFM Employment Nowcasts
| Indicator | Last Observed | Nowcast | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Unemployment Rate | 2.58% | 3.44% | — | — |
| Underemployment Rate | 10.42% | 12.34% | — | — |
| Male Unemployment | 2.50% | 3.35% | — | — |
| Female Unemployment | 2.61% | 3.54% | — | — |
Observed = latest quarterly ENOE value. Nowcast = DFM filtered estimate using monthly auxiliary data. "Revision" = change from previous run.
Labor slack and its composition shape inflation pressure, policy timing, and social risk. Unemployment, underemployment, and unemployment by gender reveal how broad and uneven slack is. In Mexico's large informal sector, the informal employment share can swing sharply — often contracting faster in downturns as unprotected jobs are cut first, then rebounding early — masking true slack if headline unemployment alone is tracked. Tracking these dimensions helps distinguish cyclical slack from structural mismatches and calibrate monetary policy accordingly.
Between quarterly ENOE survey releases, a Dynamic Factor Model (DFM) nowcasts employment indicators using higher-frequency auxiliary data. The model ingests monthly series — industrial production, consumer confidence, capacity utilization, retail sales, and private consumption — alongside quarterly GDP components to extract common factors that track the business cycle. When any auxiliary series receives new data, the Kalman filter updates the nowcast, providing an early signal before the next official employment release.
Out-of-sample backtest over 15 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 15 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Unemployment (RMSE 0.33 vs 0.11 naive, n=12); Underemployment (RMSE 1.25 vs 0.49 naive, n=10); Male Unemployment (RMSE 0.27 vs 0.25 naive, n=10); Female Unemployment (RMSE 0.27 vs 0.27 naive, +0% improvement, n=10).
Updated: 2026-02-12 by Jorge Martínez
Key Takeaways
INEGI's Q4 2025 productivity release shows secondary sector output at 102, continuing its recent upward trend. The latest INEGI productivity data for Q4 2025, released in December, indicates that the secondary sector productivity index is at 102, reflecting a 3-month upward streak. This growth is largely driven by construction, which has soared to an impressive 106, while mining continues to lag behind at a mere 89.8. Notably, this growth seems to be more concentrated in construction rather than being broad-based across all industries, hinting that while some sectors are thriving, others are still digging themselves out of a hole.
Across the PCA indices, manufacturing composites show a concerning divergence in performance. The composite indices reveal a mixed bag: while productivity is at a modest 0.281, sales have been robust, rising to 0.61, suggesting that demand is still alive and kicking. However, labor demand is on a downward trajectory at -1.49, raising eyebrows about the sustainability of this growth. This divergence between sales and labor demand could signal future challenges—because let’s face it, if the demand is there but the workforce isn’t, we might just be throwing a party with no one to serve the drinks.
Within manufacturing, the top-performing subsectors shine a spotlight on food production, while transport equipment remains in the dumps. The top-performing subsectors include food, which is cruising at 111, a solid indicator of consumer demand, while transport equipment languishes at a dismal 82, reflecting ongoing struggles in that area. Given that food accounts for 18.86% of total manufacturing, its strong performance is undoubtedly propping up the overall figures. Meanwhile, the stark contrast with transport equipment underscores the uneven recovery within the manufacturing landscape—it's like a feast where some are dining lavishly while others are still waiting for their plates.
Productivity trends reveal the economy's capacity to grow without stoking inflation. In Mexico, productivity in the secondary sector — mining, energy, construction, and especially manufacturing — signals how efficiently output expands relative to inputs. Strong productivity gains mean firms can meet demand without raising prices, easing inflation pressure and supporting sustainable wage growth. Weak productivity, by contrast, constrains supply, making cost shocks more inflationary. Manufacturing deserves closer scrutiny, as its diverse subsectors respond differently to global demand, exchange rate shifts, and investment cycles. Tracking these patterns helps judge whether growth is supported by efficiency gains or reliant on credit and labor cost increases.
Updated: 2026-02-06 by Jorge Martínez
Key Takeaways
The January 2026 consumer confidence survey shows the general index at 1.15, reflecting a slight dip in sentiment as worries about rule of law and security continue to cast a long shadow. INEGI's latest January release reveals confidence at the 87th percentile, indicating that while consumers are generally optimistic, they are feeling the pinch as the index fell by 0.123 points from the previous month. The most striking divergence comes from the durables-specific index, which remains a robust 2.11 and suggests that consumers are still keen to splurge on big-ticket items, even as confidence in general stability wanes. This discrepancy hints at a complex consumer psyche that’s eager to buy but wary of the broader economic landscape.
Consumer confidence surveys gauge how secure households feel about their income and the economy. The general confidence index reflects overall sentiment, while sector-specific measures — such as willingness to purchase durables or housing — reveal spending appetite in categories most sensitive to interest rates. Stronger confidence supports consumption and can add inflationary pressure; weaker confidence signals caution and potential slack. For monetary policy, these indicators help anticipate whether rate moves are restraining or stimulating household demand.
COMING SOON...
Updated: 2026-02-04 by Pablo Rivas
Key Takeaways
The January 2026 SPF survey shows the aggregate Concern Index at 2.83, reflecting a dip from last month. The January 2026 SPF survey shows the aggregate Concern Index at 2.83, placing it around the 64th percentile. This index is falling, down by 0.06 from December. It's worth noting, though, that over the past year, concerns have crept up by 0.55, indicating a growing unease among economists despite this recent dip.
Economists have identified public insecurity as the leading constraint on growth, with a notable uptick in concerns over U.S. The key constraints currently cited include public insecurity at 10.1%, U.S. trade policy at 8.4%, and a lack of structural change at 4.2%. The single biggest mover this month is public insecurity, which saw a rise of 1.53 percentage points. This growing concern reflects broader anxieties about safety and stability, which could weigh heavily on economic confidence.
The perceived probability of recession stands at 25.0%, marking a moderate level of concern relative to historical norms. Recession concerns among surveyed economists are currently moderate, reflecting a 25.0% probability compared to the previous quarter. This signals a bit of unease, especially given the elevated standing relative to historical averages. Looking ahead, the probability eases to 15.0% for the next quarter, suggesting some confidence that the economy might stabilize in the near term.
According to forecasters, the peso is viewed as overvalued, indicating a persistent misalignment in expectations. FX expectations suggest the peso is overvalued, with a current-month misalignment of +0.205. This perception has been consistent across the forecast horizon, indicating a sustained belief that the peso is weaker than anticipated. Such misalignment might prompt policymakers to reconsider interventions to stabilize the currency.
Banxico's Survey of Professional Forecasters (Encuesta sobre las Expectativas de los Especialistas en Economía del Sector Privado) polls economists from major financial institutions, consultancies, and research centers. Published monthly, it captures expert views on growth constraints, inflation expectations, and recession risks before official data confirm trends. Because these respondents shape market narratives and influence investment decisions, the survey offers an early window into shifting professional sentiment — making it a valuable leading indicator for policymakers and market participants alike.
Updated: 2026-02-27 by Alexander Dentler
Key Takeaways
Mexican equity markets as of February 27, 2026, show excess returns at 0.0408, alongside realized volatility at 0.0088. With data through February 27, 2026, realized volatility sits at 0.0088, reflecting a slight increase from the previous month. Excess returns have also shown an upward trend, rising to 0.0408, which may indicate a growing appetite for risk among investors. Although these figures suggest a more stable outlook, the persistent high levels of illiquidity underscore the challenges that market participants continue to face. Overall, the market dynamics reveal a cautious optimism tempered by underlying uncertainties.
The decomposition shows that recent volatility has been driven primarily by US policy shocks and liquidity concerns. Recent volatility has been driven by notable contributions from US policy shocks and liquidity conditions, which have both played pivotal roles in shaping the market landscape. Persistent concerns regarding economic policy uncertainty have kept the market on edge, influencing both volatility and investor sentiment. Such factors highlight the interconnectedness of local and global economic environments, emphasizing the need for vigilance in navigating these turbulent waters.
Investor sentiment remains cautious amidst rising policy uncertainty, with the Economic Policy Uncertainty (EPU) index reflecting ongoing concerns. Policy uncertainty continues to weigh heavily on investor sentiment, as evidenced by elevated levels in the EPU index. This uncertainty, coupled with alarmist discussions surrounding public security issues, suggests that market participants are grappling with a complex landscape. As sentiment remains fragile, the focus will be on how these dynamics unfold in the coming weeks, especially as policymakers assess the balance between stimulus and structural challenges.
Volatility Measures
| Measure | Jan 2026 | Feb 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | 0.2107 | 0.2762 | +0.0656 | US Policy Shocks (+0.145) |
| Realized Volatility | 0.0093 | 0.0097 | +0.0003 | Uncertainty (-0.001) |
| Illiquidity (Amihud) | 105.3916 | 93.2687 | -12.1229 | US Policy Shocks (-11.390) |
Monthly averages. Top Driver = largest OLS category contribution to latest value.
Financial market returns, volatility, and liquidity signal investor sentiment and risk appetite. Excess returns over government bonds capture the risk premium investors demand for holding equities; wider spreads suggest higher perceived risk or stronger growth prospects. Realized volatility in a stock market index reflects uncertainty — sharp swings indicate fragile sentiment and raise the cost of capital. Illiquidity shows how trading volume and price impact interact: when liquidity dries up, small trades can move prices disproportionately, amplifying shocks. For monetary policy, these indicators matter because they shape funding costs, investment flows, and the broader transmission of rate decisions into financial conditions.
Volatility drivers are analyzed in two steps. First, Principal Component Analysis (PCA) groups the six SPF concern categories and investor sentiment indicators (AAII bull-bear spread, NAAIM exposure index) into thematic driver clusters that capture common variation. Second, an OLS regression decomposes recent volatility movements into contributions from each driver cluster, quantifying how much of the observed excess return and realized volatility is attributable to policy uncertainty, external sentiment, and domestic macro conditions. The decomposition is descriptive — it identifies contemporaneous associations, not causal effects.
Updated: 2026-02-27 by Alexander Dentler
Key Takeaways
Banxico's February 2026 credit release shows money market spreads reflecting a cautious tightening in funding conditions. Following the latest February lending data, rate premia indicate that money market spreads are currently at 0.249, which is around the 23rd percentile historically. This marks a slight narrowing of -0.00666 from the previous month, suggesting a modest easing of funding conditions. However, the recent trends indicate a widening of spreads over the past year, which may signal growing concerns regarding economic stability and credit conditions moving forward.
Household mortgage rates remain elevated, presenting challenges for affordability. The total annual cost of mortgages (CAT) averages 14.0%, with a range from 11.1% to 28.2%. This high level of mortgage costs reflects the pass-through of prevailing interest rates, which could strain household budgets and dampen demand in the housing market. As Banxico contemplates adjustments to its policy rate, the implications for mortgage affordability remain a critical consideration for potential borrowers.
Corporate financing shows a preference for fixed-rate debt amidst volatile economic conditions. Debt issuance patterns reveal that firms are increasingly favoring fixed-rate instruments, with fixed rates making up 18.31% of total debt issuance. This shift underscores a strategic response to uncertain market conditions, as companies seek to mitigate risks associated with variable-rate financing. The balance indicates a cautious approach toward capital raising, reflecting broader concerns about economic stability and future interest rate movements.
Rate premia show how market and bank funding costs move relative to the policy rate, indicating the efficiency of monetary transmission. Household mortgage rates capture the cost of long-term borrowing — their sharp rise in recent years signals affordability pressures and distributional effects, as many families face double-digit costs. Debt issuance patterns, normalized by GDP, reveal how firms finance themselves; the balance between fixed and variable rates matters for vulnerability to policy shifts. Together, these indicators show how policy rates filter into real borrowing conditions, affecting credit demand, investment, and ultimately growth and inflation dynamics.
