Every atomic assertion extracted from the underlying record, ranked by evidence strength.
The Governing Board determined that it will be appropriate to maintain the reference rate at its current level.
The rate cut in May, which brought the reference rate to 6.50%, concluded the cycle that began in 2024.
Domestic economic activity contracted in the first quarter of 2026.
Annual headline inflation rose from 3.69% in the fourth quarter of 2025 to 4.13% in the first quarter of 2026.
The conflict in the Middle East has led to greater uncertainty, increasing risks of both higher inflation and lower economic growth globally.
In March, interest rates on medium- and long-term government bond yields increased.
In April and so far in May, the peso appreciated, largely reversing the trend in March.
In April and so far in May, interest rates on the referred maturities exhibited volatility.
In the first quarter of 2026, global economic activity expanded at a faster pace than in the previous quarter.
The economic slack in Mexico widened in the first quarter of 2026.
Headline inflation rose between the fourth quarter of 2025 and the first quarter of 2026.
The rise in headline inflation reflected fiscal adjustments that took effect in early 2026 for certain food items.
The rise in headline inflation reflected supply shocks affecting the non-core component.
At its February meeting, Banco de México's Governing Board paused its rate-cutting cycle.
The pause was in order to assess the impact of the aforementioned fiscal adjustments and the behavior of the determinants of inflation.
At its March and May meetings, the Governing Board resumed the rate-cutting cycle by lowering the target rate by 25 basis points at each meeting.
Global economic activity expanded at a faster pace in the first quarter of 2026 than in the previous quarter.
This performance reflected a rebound in the growth rate of advanced economies.
Economic activity in the group of emerging economies, excluding China, moderated overall.
The US economy continued showing resilience in the first quarter of 2026.
Economic activity in the euro area remained sluggish.
The Chinese economy grew at a faster pace than in the previous quarter.
Uncertainty in the international environment increased amid the escalation of geopolitical tensions in various regions.
The conflict in the Middle East stands out for its impact on energy prices and other commodity prices.
The impact of the conflict on the global economy remains uncertain and continues to depend on its duration and intensity.
The balance of risks to global economic growth has become more skewed to the downside.
Headline inflation continued trending downwards in various of the major advanced and emerging economies during the first months of the year.
As of March, headline inflation rebounded in a large number of economies due to the rise in energy prices stemming from the conflict in the Middle East.
In several countries, the most recent inflation readings were in general above the levels registered at the end of 2025 and above their respective central banks' inflation targets.
Core inflation showed a differentiated behavior across countries, exhibiting persistence in several of them.
Inflation faces a more uncertain outlook as a result of the escalation of the conflict in the Middle East.
The conflict in the Middle East has led to increases in the prices of commodities and other inputs.
During the period covered by this Report, central banks made heterogeneous decisions.
In April, the US Federal Reserve kept the target range for the federal funds rate unchanged for the third consecutive meeting.
The US Federal Reserve had lowered the federal funds rate in the last three decisions of 2025.
The Federal Open Market Committee (FOMC) reported that recent indicators suggest economic activity has expanded at a solid pace.
The FOMC also pointed out that inflation is elevated, partly reflecting the recent increase in global energy prices.
Between December 2025 and March 2026, the median projection for the federal funds rate remained unchanged at 3.4% for the end of 2026.
The median projection for the federal funds rate remained unchanged at 3.1% for the end of 2027 and 2028.
This would imply a 25-basis-point cut in the federal funds rate in 2026 and an additional cut in 2027.
The projection for the end of 2026 for the federal funds rate implied by the swap curves (Overnight Index Swap, OIS) rose from the 3.2% anticipated at the end of 2025 to 3.9% in its most recent projection.
Markets have been sensitive to the evolution of geopolitical conflicts, to adjustments in expectations regarding the US Federal Reserve's monetary policy stance, and to perceptions about the fiscal sustainability of some advanced economies.
The outbreak of war in the Middle East in late February marked an inflection point, with a significant increase in energy prices, tighter financial conditions, and lower risk appetite.
Negotiations in April between the parties in dispute helped reduce volatility in financial markets and partially reversed the tightening of financial conditions.
Significant uncertainty prevails regarding the duration and intensity of the conflict, as well as the impact it might continue to have on financial markets.
The Mexican peso continued its trend towards appreciation throughout January and February.
Interest rates on Mexican government bonds declined across all maturities in January and February.
Domestic financial markets registered increased volatility in light of the military conflict in the Middle East.
The Mexican peso depreciated moderately due to the military conflict in the Middle East.
Medium- and long-term interest rates rose due to the military conflict in the Middle East.
In April and so far in May, the Mexican peso reversed its trend towards depreciation.
In May, a rating agency revised the outlook on the sovereign debt rating from stable to negative.
Another rating agency lowered its sovereign rating by one level in May.
Despite these adjustments, the sovereign rating maintains its investment-grade status across the major agencies.
Domestic financial markets were not affected by the rating announcements.
Mexico's GDP declined significantly in the first quarter of 2026, after having improved in the fourth quarter of 2025.
This behavior was mainly due to a reversal of the moderate recovery in industrial activity observed at the end of 2025, as well as to a contraction in services.
During the January-March 2026 period, both job creation and labor force participation remained weak.
Going forward, the economy is expected to return to a path of moderate growth, although significant downside risks are still present.
The ongoing USMCA review process and its eventual outcome represents a key element of uncertainty for the Mexican economy.