Bank of Mexico rate decision in May

Specific Q2 and Q3 2026 inflation forecasts are not available. The research does not contain the precise headline and core inflation forecasts for Q2 and Q3 2026 from Banco de México's March 2026 Quarterly Inflation Report. The provided sources either reference forecasts for different quarters or offer general estimates for 2026 without the specific quarterly breakdown requested.

Banco de México provided other inflation projections for 2026. While the specific Q2 and Q3 2026 forecasts were not identified, Banco de México (Banxico) did release other projections for the year. For instance, Banxico anticipated headline inflation at 4.1% for Q1 2026 ^[2]. Additionally, Banxico maintained its forecast for Q4 2026 average annual headline inflation at 3.5% ^[3], and its forecast for Q4 2026 average annual core inflation was also maintained at 3.4% ^[4]. Banco de México also indicated that it was preserving its overall inflation estimates for both 2026 and 2027 ^[5].

Gabriel Cuadra García assumed a neutral policy stance on the Banxico board. Appointed to replace Deputy Governor Irene Espinosa Cantellano, whose term concluded on December 31, 2024, Cuadra García took over from a member who was considered the last "hawkish" voice on the Banxico board ^[1]. The Mexican President nominated Gabriel Cuadra García to the Banxico Board, with sources identifying him as the new deputy governor ^[4]. Early market expectations for Cuadra García indicated an anticipated "neutral" posture ^[2]. This perception was reinforced on February 21, 2025, when Cuadra García publicly stated that he rules out being a "hawk" in monetary policy, directly distancing himself from a hawkish inclination ^[3].

His voting record and later remarks consistently supported a neutral position. Gabriel Cuadra García's voting behavior further solidified this stance; in monetary policy meetings on both February 6, 2025, and March 26, 2025, he voted with the majority of the Governing Board to maintain the target for the interbank overnight interest rate at 11.25% ^[5]. This action demonstrates a balanced approach, avoiding either an aggressive rate hike or a significant cut. Additionally, in an interview on January 14, 2026, Cuadra García suggested that Banxico might pause its easing cycle ^[6]. While this indicates a cautious approach against aggressive dovishness, it remains consistent with an overall balanced, neutral perspective, aligning with prior market expectations and his public statements.

During the week of April 27, 2026, a U.S. Federal Reserve rate cut in June was highly unlikely. The implied probability of a rate reduction at the June 2026 Federal Open Market Committee (FOMC) meeting was just 1.7%, as indicated by the CME FedWatch Tool ^[1]. While explicit probabilities for a rate hike in June were not detailed in available sources for that specific week, the absence of such reporting, combined with the very low probability of a rate cut, suggested that a rate increase was not a primary expectation among market participants during this period.

Market sentiment strongly favored the Federal Reserve maintaining current rates at the preceding April 29 FOMC meeting. The CME FedWatch Tool priced an overwhelming 99% probability for rates to remain steady at that April meeting ^[2]. This consistent expectation for stability in monetary policy leading into the June meeting further highlighted the market's general view against significant rate adjustments.

Mexico's Ministry of Finance submitted key economic policy documents in April 2026. The Mexican Ministry of Finance (SHCP) delivered the "Pre-Criterios Generales de Política Económica 2027" to the Congress of the Union in April 2026 ^[1]. This report, commonly referred to as the "Pre-Criterios 2027," outlines the government's economic policy guidelines and provides updated macroeconomic projections for both the current fiscal year (2026) and the subsequent fiscal year (2027) ^[1].

The requested fiscal balance projection is not detailed in sources. Despite the confirmation of the "Pre-Criterios 2027" submission by the SHCP in April 2026, the specific projection for the primary fiscal balance for fiscal year 2026, expressed as a percentage of GDP, is not explicitly provided within the titles or brief descriptions of the available sources ^[2]. While the submission of the report is verified, the precise primary fiscal balance figure for FY2026 from that particular document remains unstated in the research findings ^[2].

Mexican TIIE 28 swaps indicate a 25-basis point rate cut for May 2026. The Mexican TIIE 28 interest rate swap curve suggests a 25-basis point reduction to the Bank of Mexico's (Banxico) policy rate for its May 7, 2026 meeting. This expectation is widely shared among market participants, with prediction markets showing a high likelihood for this specific cut ^[1], ^[2], ^[3].

The TIIE 28 swap curve forecasts Banxico's future monetary policy. The TIIE 28 interest rate swap curve serves as a crucial tool for forecasting monetary policy in Mexico, reflecting the collective market assessment of future central bank actions ^[4], ^[5]. While possibilities like holding rates steady or larger cuts exist, the dominant market consensus, as incorporated into the swap curve, strongly points toward a modest 25-basis point reduction ^[1], ^[2], ^[3]. This aligns with analyses that view the swap curve as an active gauge of Banxico's future policy direction ^[4].