The Mexican peso rose to 17.2 in May, approaching the strongest in two years after the Bank of Mexico stated that it was done with its interest-rate cutting cycle. The central bank reduced its benchmark policy rate by 25bps to 6.5% in a narrow decision, compared to expectations of more consensus for a cut, but signaled that it concluded the easing cycle that began in March of 2024. Banxico delivered the clear statement as elevated energy prices due to the war in the Middle East threaten inflation expectations in the Mexican economy. This supported the continuation of the peso carry trade, supporting the currency despite downside risks to growth. The last GDP data pointed to a sharper contraction than expected of 0.8% in Q1.