Anna 
Following the Bank of Mexico’s (Banxico) policy meeting on Thursday, the Mexican Peso (MXN) surged higher against its major trading pairs, driven by the central bank’s decision to maintain interest rates unchanged and revise its inflation forecasts upward due to persistent price pressures.
The Banxico’s unanimous decision to keep the policy rate steady at 11.00% signals that interest rate cuts are not expected in the near future. This stance is viewed positively for the Mexican Peso, as higher interest rates tend to attract more foreign capital inflows.
At the time of publication, key currency pairs showed the following exchange rates: USD/MXN at 16.80, EUR/MXN at 18.12, and GBP/MXN at 21.08.
The Mexican Peso’s appreciation continued into Friday’s European trading session, with the MXN only slightly retracing from Thursday’s notable gains.
Banxico’s upward revision of its inflation forecasts for the next year and a half reflects expectations of stickier inflation dynamics than previously anticipated. The central bank now forecasts inflation to decelerate more slowly, with the 3.0% target not expected to be reached until Q4 of 2025. This represents a revision from earlier forecasts that predicted reaching 3.1% inflation by Q2 of 2025.
In its accompanying statement, Banxico highlighted the persistence of inflationary pressures, particularly in services, stating that “services inflation is foreseen to show more persistence, as compared to what had been previously anticipated.”
The Mexican Peso’s recent strength reflects market sentiment following Banxico’s cautious stance on interest rates and inflation, positioning the currency favorably in the current economic environment.
