Puerto Vallarta, Mexico – The Mexican peso and the benchmark index of the Mexican Stock Exchange (BMV) weakened following an interest rate decision by the U.S. Federal Reserve (Fed) that met market expectations but indicated a measured pace for future cuts. The move came as the Fed sought to balance its objectives of supporting economic growth while maintaining vigilance on inflation trends.
On Wednesday, the U.S. central bank lowered its benchmark interest rate by 25 basis points, setting it within a range of 4.25% to 4.50%. Although markets had anticipated this adjustment, investors reacted to the Fed’s projection of only two quarter-point rate cuts by the end of 2025, reflecting the central bank’s intention to keep borrowing costs elevated longer than some participants had hoped.
In response, the Mexican peso ended the day at 20.3720 pesos per U.S. dollar, a depreciation of 0.74% compared to the previous session. According to data from the Bank of Mexico (Banxico), this marks the currency’s steepest single-day decline since November 26. Earlier in the session, prior to the Fed’s announcement, the peso had strengthened 0.46% to trade at 20.0750 pesos per dollar.
“The markets did not like the Fed’s restrictive tone, since an interest rate that will remain high for longer implies lower valuations for companies,” said Gabriela Siller, director of analysis at financial firm Base.
With the Fed’s decision now priced in, investor attention is shifting to upcoming central bank actions elsewhere. The Bank of Japan is set to deliver its final monetary policy decision of the year tonight, a move that could further influence global market sentiment. Following that, the Bank of Mexico will announce its own monetary policy decision on Thursday, potentially impacting the peso and domestic financial assets.
Mexico’s equities market also posted declines amid the cautious global outlook. The benchmark S&P/BMV IPC index dropped for the third consecutive day, closing 0.90% lower at 49,968.44 points. This represents its weakest level since November 29. Among the session’s notable decliners, shares of conglomerate Orbia fell 6.38% to 15.41 pesos, while shares of Regional, known as Banregio, lost 5.79% to finish at 122.75 pesos.
In the Mexican debt market, yields also edged higher as investors digested the implications of the Fed’s stance. The yield on the 10-year sovereign bond increased three basis points, settling at 10.19%, while the 20-year bond yield rose by one basis point to close at 10.51%.
Overall, Wednesday’s developments underscore the cautious environment facing emerging markets as global monetary authorities navigate shifting economic conditions. With key decisions imminent from both the Bank of Japan and the Bank of Mexico, investors will continue monitoring central bank communications and policy signals for indications of how markets may adjust in the coming days.
Puerto Vallarta, Mexico - The Mexican peso and the benchmark index of the Mexican Stock Exchange (BMV) weakened following an interest rate decision by the U.S. Federal Reserve (Fed) that met market expectations but indicated a measured pace for future cuts. The move came as the Fed sought to balance its objectives of supporting economic growth while maintaining vigilance on inflation trends.
