Publications

Three voting regional presidents, while supporting the decision to hold rates steady today, did not back the statement’s easing bias, signaling a growing view within the Committee that the scope to resume rate cuts this year is becoming increasingly limited.

The El Niño phenomenon in Colombia, with a probability close to 90% by September 2026, would bring drought conditions and higher temperatures. This climate shock would affect food supply and increase electricity generation costs, leading to temporary inflationary pressures in the economy.

Short-term yields have declined as markets reassess the Fed outlook and move away from pricing rate hikes this year, with the 2-year leading the adjustment and the long end moving more modestly.

Headline inflation in Spain accelerated to 3.4% YoY in March, driven by energy and, to a lesser extent, by services and industrial goods. In fact, core inflation rose unexpectedly to 2.9%. BBVA Research estimates that headline inflation could rise to 3.6% or 3.7% in April.

Inflation in March stood at 5.56% year-on-year, driven by the rebound in food prices due to the rainy season and by persistent pressures in services associated with the minimum wage. Inflation is expected to close the year at 6.5%, amid these pressures and additional climate and geopolitical risks.

In Banxico's monetary policy statement of March 26, 2026, two messages coexist: on the one hand, the forecasts for headline and core inflation are adjusted upwards between 1Q26 and 3Q26 with a balance of risks having an upward bias; on the other hand, the Board of Governors reduces the reference rate by 25 basis points.

Consumer prices inflation came in at 1.94% m/m in March, below both our (2.2%) and market (2.3%) expectations, bringing annual inflation down to 30.87%. However, rising energy prices, ongoing geopolitical uncertainty, and adverse supply-side factors are reinforcing upside risks to the inflation outlook.