Mexico's central bank raises growth forecast, pushes back inflation convergence

Mexico's central ​bank on Wednesday raised ‌its economic ​growth forecast for this year, but pushed back the timeline for ‌inflation to decline to its target.

Banxico, as the Bank of Mexico is known, increased its growth forecast for ‌this year to 1.5% from a previous estimate of ‌1.1%. However, Banxico now expects headline inflation to converge to its 3% target in the fourth quarter of 2027, later ⁠than ​its previous forecast ⁠of the second quarter.

The central bank also slightly raised its ⁠core inflation forecast for the fourth quarter of this year ​to 3.5% from 3.4%. The latest data showed ⁠inflation for the first half of August at 3.26% and core ⁠at ​3.93%.

While this year's growth outlook improved, the bank trimmed its 2027 GDP growth forecast to ⁠2.0% from 2.1%. The central bank also noted that economic ⁠activity continues to ⁠experience a period of weakness with uncertainty surrounding the review of the U.S.-Mexico-Canada (USMCA) ‌trade ‌agreement.