Inflation Giving a Break and the End of the War Helping the Peso

This week, the cessation of hostilities between Israel and Iran was announced, which helped the peso-dollar exchange rate to move from 19.30 on Monday, June 23, to 18.92 at the time of writing this contribution on Wednesday, June 25. Definitely, the fact that missiles stop flying in that part of our world is great news. However, what was clearly demonstrated is that the sensitivity of the parity is on edge.

On the other hand, inflation had a decrease this first half of June to levels of 4.51%, better than the second half of May where 4.62% was recorded. This definitely helps Banco de México to lower the reference rate once again at its meeting on Thursday, June 26. The market is discounting a 50 basis point drop. But we must consider that inflation is still above the central bank’s target, which will surely cause a slower pace of declines during the second half of the year.