The USD/MXN currency pair hovered above a 20 1/2-month low of 17.0863 on Wednesday ahead of the minutes from the Federal Reserve’s January meeting, which may provide fresh clues over monetary policy trajectory.
The Fed left its federal funds rate target range intact at 3.50%-3.75% at its January 27th-28th meeting, following three successive rate cuts last year that brought borrowing costs to their lowest level since 2022.
FOMC policy makers highlighted that economic activity had been expanding at a solid pace, job growth had remained slow, while inflation had remained somewhat elevated.
Fed Chair Powell noted the US economy was coming into the new year on a firm footing and current interest rates were appropriate to promote progress toward both of the US central bank’s objectives.
Powell had also said that the central bank was “well-positioned” to evaluate incoming data on a meeting-by-meeting basis without adhering to a predetermined rate path.
Chicago Fed President Austan Goolsbee said on Tuesday that the US central bank could approve “several more” rate cuts for 2026, in case inflation resumed easing toward the 2% target.
Investors are currently pricing in 75 basis points of rate cuts this year, with the first likely in June or July.
Market players will also be looking into the minutes from the Mexican central bank’s February meeting due on Thursday.
Banco de México left its key policy rate without change at 7% at its February 5th meeting, following 12 consecutive rate cuts in an easing cycle that began in March 2024.
The USD/MXN currency pair was last little changed on the day to trade at 17.1238.
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