Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-02-26
Galia Borja, a member of Banxico's board, indicated that the central bank has room to lower interest rates. She emphasized that the decision would depend on the evolving economic conditions and inflation trends. This statement opens the possibility for future rate adjustments as the economic landscape changes. — El Financiero, 26 Feb 2026. Read more
The political party Movimiento Ciudadano (MC) has accused the government of keeping the approved 'dignified wage reform' frozen despite its approval in 2024. MC argues that the reform has not been implemented, raising concerns about the government's commitment to improving wages for workers. — El Financiero, 25 Feb 2026. Read more
Wall Street closed with gains, highlighted by a 1.26% increase in the Nasdaq. The Mexican Stock Exchange (BMV) also saw a rebound. The positive performance in U.S. markets reflects investor optimism. — El Financiero, 25 Feb 2026. Read more
The Mexican peso experienced a slight appreciation against the US dollar during a trading session characterized by limited market references. The movement in the exchange rate reflects ongoing market dynamics without significant economic indicators influencing the currency's performance. — El Economista, 25 Feb 2026. Read more
The Mexican peso recorded its second consecutive day of gains against the dollar, recovering from recent declines attributed to security issues in the country. The currency's performance reflects market reactions to ongoing concerns about safety and its impact on the economy. Investors are closely monitoring developments as they assess the peso's stability. — El Financiero, 25 Feb 2026. Read more
The Mexican peso reversed its initial decline and gained ground against the US dollar. This recovery comes amid ongoing market fluctuations and reflects the peso's resilience in the face of economic challenges. The article highlights the importance of monitoring currency movements in the current financial landscape. — 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. This decline reflects ongoing economic uncertainties and market reactions to recent political developments. The situation has raised concerns among investors regarding the stability of the peso in the near term. — El Economista, 23 Feb 2026. Read more
The Mexican peso has depreciated against the US dollar, even though the country's GDP growth exceeded expectations. This development raises concerns about the currency's stability despite positive economic indicators. The article discusses the implications of this depreciation in the context of Mexico's economic performance. — El Economista, 23 Feb 2026. Read more
Foreign ownership of Mexican companies has reached an all-time high, reflecting increasing interest from international investors. This trend indicates a significant shift in the market dynamics, with foreign entities acquiring a larger share of the Mexican economy. The article highlights the implications of this development for local businesses and the overall economic landscape. — El Economista, 23 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
Peso to USD: Philippine Peso Exchange Rate, News & Updates — Google News, 25 Feb 2026. Read more
Iowa postpones trade mission to Mexico due to unrest — Google News, 25 Feb 2026. Read more
Strengthening Canada–Mexico Trade at a Pivotal Moment: A Recap of our Mission to Mexico City — Google News, 25 Feb 2026. Read more
USD/MXN Forecast: The Mexican peso regains strength after inflation data release — Google News, 24 Feb 2026. Read more
Inflation in Mexico Rises Above Expectations — Google News, 24 Feb 2026. Read more
Mexico’s annual inflation speeds more than expected in early February — Google News, 24 Feb 2026. Read more
Amidst the oil shortage in Cuba, Canada announces a plan to help the island, which is under pressure from the US, following the same path as Mexico; Lula, in Brazil, is also being pressured to help Cuba — Google News, 24 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: 2026-02-26 by Alexander Dentler
Key Takeaways
With recent shifts in market expectations and underlying economic indicators, Banxico's next policy move is under intense scrutiny. The model indicates a substantial chance of no action at the upcoming February 5, 2026 decision, with a hold probability at about 58%. This reflects a notable recalibration in expectations since the last update, where the modal bucket shifted from -25bp to ±0bp. Currently, the expected move suggests a mean adjustment of -11bp, with about 42% probability of a cut, and a significant focus on maintaining the current rate amid ongoing economic challenges.
Data inputs have shown some volatility, particularly around inflation and economic policy uncertainty. Recent observations have indicated a slight easing in headline inflation, while economic policy uncertainty remains a pressing concern. These changes are crucial as they directly inform the model's expectations and the broader market outlook.
The interplay of various economic drivers continues to shape Banxico's policy landscape. Moderate dovish pressure is emerging from easing headline inflation, while economic policy uncertainty exerts a more pronounced negative influence. The primary drivers of concern include ongoing volatility in the exchange rate and bond yields, which are being closely monitored. However, some drivers, like credit spreads, currently exert negligible impact on the committee's decision-making process. Ultimately, the direction of policy will depend on the committee's assessment of these dynamics, reinforcing that model mechanics alone do not dictate outcomes.
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: 2026-02-26 by Alexander Dentler
Key Takeaways
As of 2026-02-26, bond prices show the 10Y-3Y nominal spread at 1.49%, signaling a noteworthy shift in market sentiment. The latest yield curve data reveals the nominal 10Y-3Y spread at 1.49%, reflecting a 0.22% increase from the prior observation, while the real spread holds at 0.50%. Notably, both spreads remain in normal territory, indicating a lack of inversion for over a year, despite the implied inflation spread rising to 0.99%. This uptick in the inflation spread suggests that market participants are expecting slightly higher inflation moving forward, which may influence future monetary policy decisions.
The curve shape suggests a growing expectation for interest rate cuts by Banxico, aligning with market sentiment. Markets appear to be pricing a significant probability of a rate cut at the next Banxico meeting, evidenced by the upward movement in nominal spreads. However, this optimism faces potential headwinds, as the central bank's recent communications emphasize a cautious approach, particularly regarding inflation trends and global economic uncertainties. Thus, while the yield curve reflects a potential easing of monetary policy, the broader economic landscape may temper expectations.
Yield Spread Update
| Spread (10Y−3Y) | 24 Feb | 25 Feb 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.54 | 1.49 | -0.050 | 1.19 |
| Real | 0.46 | 0.50 | +0.039 | 0.90 |
| Inflation | 1.08 | 0.99 | -0.089 | 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: 2026-02-26 by Alexander Dentler
Key Takeaways
The mid-February 2026 CPI release shows headline inflation at 3.89%, within Banxico's target band of 2%-4%. The mid-February 2026 CPI release shows headline inflation at 3.89%, approximately at the 42nd percentile and comfortably within Banxico's target band of 2%-4%. This marks a slight increase of 0.04% compared to the previous release, indicating a modest upward trend in consumer prices. The ongoing stability in headline inflation may provide Banxico with the necessary leeway to consider policy adjustments, particularly in light of the current market sentiment favoring a rate cut.
Core inflation, which excludes volatile food and energy prices, stands at 4.55%, indicating underlying price pressures are still pronounced. Core inflation, which excludes volatile components, is currently at 4.55%, placing it around the 77th percentile and notably above the 3% target. This represents a slight decrease of 0.02% from the previous month, suggesting a potential easing in core price pressures; however, it remains significantly above the target. The divergence between headline and core inflation rates raises questions for policymakers about the trajectory of underlying inflation trends as they contemplate future monetary policy adjustments.
Trade prices exhibit notable movements, with export prices rising sharply, reflecting external market conditions. Trade prices have shown significant activity, particularly in export prices, which have surged to 7.05%, indicating a 1.15% increase from the previous month. This upward movement in export prices, now at the 67th percentile, underscores the interconnectedness of domestic inflation trends with global market dynamics. Meanwhile, import prices remain more subdued at 2.30%, suggesting a complex landscape for Banxico as it navigates potential rate cuts amidst varying inflationary pressures.
| 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.
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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: 2026-02-26 by Alexander Dentler
Key Takeaways
Mexican equity markets as of February 26, 2026, show excess returns at 0.0408, reflecting a modest recovery in investor sentiment amidst ongoing economic uncertainties. With data through February 26, 2026, realized volatility stands at 0.0088, indicating a slight uptick in market fluctuations. This increase is noteworthy as it comes on the heels of a backdrop characterized by heightened economic policy uncertainty and recent turmoil surrounding public security issues. Though illiquidity metrics have not shifted materially, the current volatility levels suggest a cautious market environment as participants digest the implications of potential monetary policy adjustments from Banxico.
The decomposition shows that recent volatility has been primarily driven by US policy shocks and ongoing liquidity concerns. In particular, the contributions from uncertainty have been persistent, reflecting the broader impact of external economic dynamics on local markets. Notably, the volatility index has risen following recent U.S. monetary policy announcements, underscoring the interconnectedness of global financial conditions and local market responses. This interplay highlights the necessity for market participants to remain vigilant as they navigate through these turbulent waters.
Investor sentiment appears strained, with rising policy uncertainty reflected in elevated Economic Policy Uncertainty (EPU) levels. The current sentiment landscape reveals alarm among investors regarding the stability of economic policies and public safety, further complicating the market outlook. The recent spikes in discussions around public security issues have added layers of complexity to an already uncertain economic environment, indicating that stakeholders will need to carefully assess these factors as they formulate their strategies moving forward.
Volatility Measures
| Measure | Jan 2026 | Feb 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | 0.2107 | 0.2738 | +0.0631 | US Policy Shocks (+0.145) |
| Realized Volatility | 0.0093 | 0.0099 | +0.0006 | Uncertainty (-0.001) |
| Illiquidity (Amihud) | 105.3916 | 96.9767 | -8.4149 | 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: 2026-02-26 by Alexander Dentler
Key Takeaways
Banxico's February 2026 credit release shows money market spreads tightening, reflecting shifting dynamics in the lending landscape. Following the latest February lending data, rate premia have narrowed, with TIIE 28d and TIIE 91d rates at 0.31% and 0.36%, respectively, while the spread against the policy rate stands at 0.25. This marks a slight tightening of -0.00621 from the previous month. The recent trend suggests a cautious movement in funding costs, potentially signaling increased lender confidence amidst ongoing economic uncertainty.
Household mortgage rates continue to reflect significant cost pressures for borrowers. The total annual cost of mortgages, averaging 14%, indicates a considerable range from 11.1% to 28.2%. This level of mortgage cost suggests limited pass-through from the policy rate, raising affordability concerns for potential homebuyers as economic pressures persist.
Debt issuance patterns show a dominant reliance on fixed-rate financing amidst a challenging economic backdrop. Corporate financing remains skewed towards fixed-rate instruments, which account for 18.31% of total debt issuance. This trend highlights a strategic shift among firms seeking to mitigate interest rate risk as they navigate a landscape characterized by heightened volatility and uncertainty.
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.
