The Mexican peso fell below 20.1 per US dollar, approaching the monthly low of 20.37 reached on December 18, as investors processed the latest inflation data and evaluated the Bank of Mexico's monetary policy outlook.
Mexican peso fell below $20.1
While Mexico's headline inflation moderated to 4.44% year-on-year in the first half of December, it exceeded expectations and remained above the central bank’s 3% target. Additionally, core inflation unexpectedly rose to 3.62%, halting a six-week decline and signaling persistent price pressures in the economy.
Bank of Mexico lowered its benchmark rate
The Bank of Mexico (Banxico) recently lowered its benchmark rate by 25 basis points to 10%, in line with market expectations. While this rate cut aligns with forecasts for cooling inflation, expected to reach 4.6% by year-end, the central bank's projection that inflation will not return to the 3% target until mid-2026 has introduced further uncertainty, dampening investor confidence.
