Fed Keeps Rates Steady
The Federal Reserve maintained its target range for the federal funds rate at 4.25% to 4.50%, as expected by market operators. In the post-announcement conference, Fed Chair Jerome Powell stated that inflation is expected to rise this summer due to tariffs.
“Although the Fed made no changes to the rate, as anticipated, traders focused on expectations. We might still see a couple of cuts this year,” explained financial consultant Juan Carlos Cruz Tapia.
Geopolitical Tensions
Regarding geopolitics, Iran’s Supreme Leader, Ayatollah Ali Khamenei, rejected a demand made by U.S. President Donald Trump in a message to the media. In a televised speech, Khamenei warned that Iran will not take orders.
The Mexican peso closed the mid-week trading session slightly lower against the dollar, as markets remained vigilant about the conflict between Iran and Israel. The exchange rate ended the day at 19.0355 pesos per dollar, a decrease of 2.10 centavos or 0.11% compared to the previous day’s closing rate of 19.0145 pesos, according to official data from Banco de México (Banxico).
The dollar’s price fluctuated between a high of 19.0478 pesos and a low of 18.9436 pesos. The DXY, or Intercontinental Exchange’s dollar index, which compares the U.S. currency to a basket of six references, increased by 0.05% to 98.87 units.
Impact of Geopolitical Tensions
Geopolitical tensions in the Middle East continue to weigh on market sentiment. The peso’s exchange rate has been oscillating in the 19-to-the-dollar zone, confined between high-volume levels of 18.90 and 19.05.
“The market will remain attentive to the evolution of geopolitical tensions in the Middle East, as well as other key factors such as the ongoing trade negotiations and economic indicators from major countries,” Cruz Tapia added.
Key Questions and Answers
- What did the Federal Reserve announce regarding its monetary policy? The Fed kept its target range for the federal funds rate unchanged at 4.25% to 4.50%, expecting inflation to rise this summer due to tariffs.
- How did the Mexican peso perform against the dollar? The peso fell slightly against the dollar during mid-week trading, closing at 19.0355 pesos per dollar, down from the previous day’s rate of 19.0145 pesos.
- What is the significance of geopolitical tensions in the Middle East? Geopolitical tensions, particularly those involving Iran and Israel, have kept markets on edge. These tensions contribute to market volatility and influence currency exchange rates, including the Mexican peso against the U.S. dollar.
