Will the Bank of Mexico announce a decrease at the May meeting?

Prediction markets put the probability at 92%: Will the Bank of Mexico announce a decrease at the May meeting. Currently, markets see this as likely (92% YES). The meeting could be the last presided over by Fed Chair Jerome Powell, whose term ends in May.

What’s Happening

Traders are assigning a 92% probability that the Bank of Mexico will announce a decrease to its benchmark interest rate at its May 2026 monetary policy meeting. This expectation runs counter to the prevailing trend among major central banks in the Americas, where the U.S. Federal Reserve is widely expected to hold rates steady at its April 29 decision, marking a third consecutive pause. The divergence reflects Mexico's unique economic position, where domestic inflation has shown signs of cooling more rapidly than in the U.S., allowing policymakers greater latitude to ease monetary conditions even as the Federal Reserve maintains its "wait-and-see" posture amid rising oil prices linked to the Iran conflict. [CBS News, Apr 28]

The market's conviction that the Bank of Mexico will announce a decrease at the May meeting is bolstered by recent commentary from Banxico officials signaling that the balance of risks has shifted toward supporting economic growth. This contrasts sharply with the Bank of Canada, which is expected to hold its key policy rate at 2.25% on April 29, as economists view the oil price shock from the Iran war as a temporary blip unlikely to alter inflation expectations. The Mexican central bank's potential move would mark a significant policy divergence within North America, as the Fed's expected hold at 3.50% to 3.75% keeps U.S. rates elevated, potentially widening the interest rate differential between the two economies. [Kitco, Apr 27]

The outcome of the May 2026 meeting carries significant implications for currency markets and trade dynamics. A rate cut by the Bank of Mexico would likely weaken the peso against the dollar, potentially boosting Mexican exports but also raising import costs. The decision comes as the Fed prepares for what may be Chair Jerome Powell's final meeting, with his term expiring in May and Kevin Warsh's confirmation path clearing. Market participants will scrutinize Banxico's accompanying statement for guidance on the pace of future easing, particularly given the uncertainty surrounding global oil prices and their impact on Mexican inflation. [Fox Business, Apr 28]

Traded on Polymarket — $85K Volume

Lower-volume market on Polymarket ($85K). Wider spreads expected — enter with limit orders and be aware of slippage risk. Currently 94c YES.