• Mexican Peso regains ground, trading at 16.98 against the US Dollar following Banxico Deputy Governor's comments on maintaining high rates.
• Banxico Deputy Governor Jonathan Heath indicates possible "fine adjustments" to interest rates to combat persistent inflation.
• Fed Chair Jerome Powell hinting at prolonged high US rates due to stagnant inflation progress.

The Mexican Peso trims some of its losses against the US Dollar, but it’s not out of the woods despite remarks from Bank of Mexico (Banxico) Deputy Governor Jonathan Heath suggesting that rates would likely need to remain higher.

That and an improvement in risk appetite was a relief for the Mexican currency, which weakened to levels last seen in February 2024. The USD/MXN trades at 16.99, down 0.47%.

During an interview with Banorte’s Podcast, Heath said the central bank would likely make “fine adjustments” to the main reference rate to ensure “that the restrictive monetary stance remains at these levels for as long as necessary until we see progress on inflation.”

He added that although inflation’s downward trajectory remains in place, it stalled near the 4.4% threshold for five months. Heath added that “prices of services” are to blame for inflation's stickiness.

Across the border, Heath’s colleague, Fed Chair Jerome Powell, said rates could remain higher for longer in remarks at the Wilson Center on Tuesday. Powell said that the lack of progress on inflation would likely require keeping rates steady for “as long as needed.”