Peso gains ground in the face of the increase in the Fed rate in the United States

After the announcement of the rise in the interest rate in USA the Mexican currency tends to strengthen. In international markets, it appreciates 0.53% or 11 cents to settle at 20.43 pesos per dollar, according to information from Bloomberg.

For his part, the retail dollar It is sold below 21 pesos at 20.99 units at bank windows, 0.29% or 6 cents below its price prior to the Fed’s announcement, according to data published by CitiBanamex.

The US Federal Reserve raised the interest rate 75 basis pointswhile continuing with the actions to control the inflation which is at its highest level in several decades.

read also FED raises interest rate again 75 points

With this increase, the rate of federal funds it is raised to a target range between 2.25% and 2.5%, matching the highs of its most recent rate hike cycle, which ended in mid-2019.

Investors now expect Banco de México to replicate the move and announce a similar 75 basis point increase in the country’s benchmark rate at its next meeting.

By making borrowing more expensive, Fed Chairman Jerome Powell and his colleagues at the central bank hope to dampen economic activity that has, in part, fueled price increases.

Inflation remains at levels not seen since the early 1980s, with prices rising 9.1% in June.

The problem now is how much more interest rates will have to rise to cool inflation and how much this policy can restrict economic activity that triggers a recession.

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