The peso is gaining ground in the face of the US Federal Reserve’s rate hike

After announcing the interest rate hike in United State The Mexican currency tends to strengthen. In global markets, it rose 0.53%, or 11 cents, to settle at 20.43 pesos to the dollar, according to information from Bloomberg.

For his part, the retail dollars It sells for less than 21 pesos at 20.99 units in bank windows, 0.29% or 6 cents less than its price before the Fed’s announcement, according to data released by the Federal Reserve. CitiBanamex.

US Federal Reserve hike Interest rate 75 basis pointswhile continuing to control procedures inflation Which reached its highest level in several decades.

Read also The Fed raises interest rates again by 75 points

With this increase, the rate Federal or state funding It was raised to a target range between 2.25% and 2.5%, matching the highs of the most recent rate hike cycle, which ended in mid-2019.

Investors now expect Banco de México to repeat 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 Chair Jerome Powell and his central bank colleagues hope to dampen economic activity that has partially pushed up prices.

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

The problem now is how much interest rates need to be raised to cool inflation and how much this policy can constrain economic activity that leads to recession.

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