Coverage: Q2 2026 · Information to 13 July 2026
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TGB Quarterly Regional Banking Monitor · 13 July 2026
The Federal Reserve, the Bank of Canada and Banco de México ended the second quarter of 2026 on hold while Brazil kept cutting, to 14.25%, and bank capital stayed strong in the region's largest banking systems.
The desk view
The war in the Middle East and the oil shock it caused set the tone for policy across the Americas in the second quarter of 2026. The Federal Reserve held at 3.50–3.75% and dropped the easing bias from its statement, the Bank of Canada held at 2.25% and Banco de México closed its easing cycle at 6.50%. Copom kept cutting, to 14.25%, even as Brazilian inflation exceeded the upper limit of its tolerance band. Banks entered the period strong: US banks earned a 1.26% return on assets in the first quarter and Canada's large banks averaged a 13.7% CET1 ratio. The weak points are Brazilian credit quality and US securities losses.
The regional picture
Of the four central banks covered here, only Brazil's was still cutting at the end of the second quarter of 2026. The Federal Open Market Committee held the federal funds target range at 3.50–3.75% on 29 April and again on 17 June 2026. The Bank of Canada held its overnight rate target at 2.25% at both of its decisions, on 29 April and 10 June. Banco de México cut by 25bp to 6.50% on 7 May, said the move concluded the cycle that began in March 2024, and then held unanimously on 25 June. Brazil's Copom continued what it calls a calibration cycle, cutting the Selic from 14.75% to 14.50% on 29 April and to 14.25% on 17 June.
The common thread was the energy shock from the conflict in the Middle East. The Federal Reserve said in April that inflation was elevated partly because of the recent increase in global energy prices. The Bank of Canada said in June that global oil prices were roughly $10 a barrel above its April assumptions.
Policy rates at the end of June 2026, %
Source: Federal Reserve Board, FOMC statement, 17 June 2026; Bank of Canada, Policy rate announcement, 10 June 2026; Banco Central do Brasil, Copom statement, 17 June 2026; Banco de México, Monetary policy statement, 25 June 2026.
Policy decisions in the second quarter of 2026
| Central bank | Decision dates | Action | Rate after the decision |
|---|---|---|---|
| Federal Reserve | 29 April; 17 June | Hold; hold | 3.50–3.75% |
| Bank of Canada | 29 April; 10 June | Hold; hold | 2.25% |
| Banco Central do Brasil | 29 April; 17 June | Cut; cut | 14.50%; 14.25% |
| Banco de México | 7 May; 25 June | Cut 25bp; hold | 6.50% |
Source: Federal Reserve Board, FOMC statement, 29 April 2026; Federal Reserve Board, FOMC statement, 17 June 2026; Bank of Canada, Policy rate announcement, 29 April 2026; Bank of Canada, Policy rate announcement, 10 June 2026; Banco Central do Brasil, Copom statement, 29 April 2026; Banco Central do Brasil, Copom statement, 17 June 2026; Banco de México, Monetary policy statement, 7 May 2026; Banco de México, Monetary policy statement, 25 June 2026.
Inflation readings explain much of the split. Mexican headline inflation fell from 4.45% in April to 3.55% in the first fortnight of June, a decline of 0.90 percentage point. Canadian CPI inflation rose to 2.8% in April, and Copom's own reference scenario put Brazilian IPCA inflation at 5.2% for 2026. Banking data follow different calendars, so reference dates below vary by country.