Coverage: Q3 2026 · Information to 13 October 2026
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TGB Quarterly Regional Banking Monitor · 13 October 2026
The Federal Reserve raised rates in September while the Bank of Canada and Banco de México held, leaving US banks well capitalised and Brazilian lenders facing rising household delinquency.
The desk view
Central banks in the Americas diverged in the third quarter. The Federal Reserve moved from a split hold on 29 July to a unanimous quarter-point increase on 16 September. The Bank of Canada held at 2.25% on 2 September, citing new US tariffs and higher upside risks to inflation. Banco de México held at 6.50% on 24 September, with the balance of risks to inflation still biased upwards. US banks entered the autumn in sound health: second-quarter net income was $90.1 billion and the FDIC reported strong capital and liquidity. In Brazil, credit growth of 9.7% over 12 months came with household delinquency of 5.6%, which the central bank links to costly unsecured credit.
The regional picture
Three central banks, three paths
The Federal Open Market Committee voted 9-3 on 29 July 2026 to hold the federal funds target range at 3-1/2 to 3-3/4%. Three members dissented, preferring a quarter-point increase. On 16 September 2026 the Committee voted 12-0 to raise the range by 1/4 percentage point to 3-3/4 to 4%.
The Bank of Canada held its overnight rate target at 2.25% when it released its July 2026 Monetary Policy Report, with the decision scheduled for 15 July 2026. It held again at 2.25% on 2 September 2026, with the Bank Rate at 2.5% and the deposit rate at 2.20%. Banco de México's Governing Board held its overnight interbank rate target at 6.50% on 24 September 2026. The Board had last cut the target, by 25 basis points to 6.50%, on 7 May 2026.
The gap between the rate levels
Mexico's target sits 4.25 percentage points above Canada's. It also sits 2.5 percentage points above the top of the new US range. Banco de México recorded the Fed's September move and said Mexican policy would not have to react mechanically to expected federal funds rate adjustments.
Energy and headline inflation
Headline inflation features in all three central bank assessments. The Federal Reserve said in July that inflation remained elevated relative to the 2% goal, in part reflecting supply shocks including in energy. The Bank of Canada said CPI inflation had been hovering around 3% mainly because of persistently higher gasoline prices. Banco de México attributed the rise in headline inflation between the first fortnights of July and September to non-core inflation. Core inflation was not the source of the pressure: Canadian core measures remained close to 2% in July, and Mexican core inflation kept falling, from 3.95% to 3.79%.
Bank balance sheets
The FDIC reported that the US industry continued to hold strong capital and liquidity, which support lending and protect against potential losses. In Brazil, the central bank's June data showed 90-day delinquency on the total portfolio at 4.7%, up 1.0 percentage point in 12 months. The two systems therefore enter the final quarter from different positions: the US past-due and nonaccrual loan rate fell 9 basis points to 1.44% in the second quarter, while Brazilian 90-day delinquency rose 1.0 percentage point in 12 months.