Economic Indicators Show Growth and Stability in Mexico
Solid ECN – The Mexican peso has rallied to approximately 16.8 per USD, marking a significant rebound from its five-month trough of 17.2 on April 25th. This upturn is primarily attributed to a widespread weakening of the U.S. dollar, spurred by indications that the Federal Reserve might implement two rate cuts within the year.
These speculations were fueled by a moderated growth in U.S. job numbers for April and a surprising increase in the unemployment rate, compounded by Federal Reserve Chair Powell's earlier dismissal of any forthcoming rate hikes.
Stable Monetary Outlook as Mexican Economy Grows
On the domestic front, Mexico's central bank, Banxico, is expected to maintain its interest rates at 11% in its upcoming May 9th meeting, consistent with its rate cut in March. However, emerging data might spark discussions among Banxico's Governing Council members about potential policy adjustments.
Additionally, Mexico's economic growth has accelerated, with a 0.2% expansion in Q1 of 2024 compared to 0.1% in the previous quarter, surpassing market expectations. Business confidence remains robust, near an 11-year peak, even as inflation persists above 4%.