Daily Brief | June 19 2025

Top News

·     The Federal Open Market Committee kept its interest rates unchanged, while cutting its projections for growth and raising those for inflation. 

·     The Timely Indicator of Economic Activity estimates that the Mexican economy could fall by -0.3% y/y in May 2025. By economic activity group, an annual decline of -1.1% is expected in secondary activities and an increase of 0.1% in tertiary activities.

·     The Bank of England kept interest rates unchanged at 4.25%. The decision was divided, with six members voting to keep rates unchanged and three voting to cut them by 25 basis points.

·     Brazil’s Central Bank raised its Selic rate by 25 basis points to 15%, while also mentioning that it could halt its cycle of increases to assess the impacts of monetary policy.

·     Israel bombed nuclear targets in Iran on Thursday, while Iranian missiles struck a hospital in Israel overnight, in an escalation of the air war that has now been going on for a week and shows no signs of de-escalating. 

Economic Outlook

The Federal Open Market Committee kept its interest rates unchanged, while cutting its projections for growth and raising those for inflation. The Committee kept rates in the target range of 4.25% to 4.50% in a unanimous decision. The monetary policy statement changed its language, highlighting that uncertainty about the environment has decreased and that the committee remains attentive to risks on both sides of its dual mandate. Last month’s announcement mentioned that uncertainty had increased and that the committee was attentive to both sides of the mandate, as it judged that the risks of higher unemployment and inflation had risen. No additional technical adjustments were announced regarding the balance sheet. On the other hand, the Committee released the so-called “Fed dots,” where it maintains the expectation of two rate cuts for the remainder of 2025, unchanged from March, and for 2026, the projection was reduced from two cuts to only one. In addition, macroeconomic forecasts suffered significant adjustments, with GDP growth cut from 1.7% to 1.4% for 2025 and from 1.8% to 1.6% for 2026. On the inflation side, PCE index projections rose from 2.7% to 3.0% in 2025, and from 2.2% to 2.4% in 2026. Considering the above, we estimate that the Federal Open Market Committee will keep interest rates unchanged again at its meeting scheduled for July 30.

Markets and Stocks

Futures on major US indices were trading slightly lower following the Federal Reserve’s decision to keep its interest rate unchanged at 4.25%-4.5%, while projecting two cuts before the end of the year. Fed Chairman Jerome Powell said they are “well positioned to wait,” given the uncertain impact of President Trump’s tariffs on inflation. In Europe, markets traded in negative territory after the Bank of England decided to keep its interest rate at 4.25%, citing more persistent inflationary pressures than expected. Norway and Turkey also announced monetary policy decisions. In Asia, markets closed lower.

In the commodities market, oil prices rose after President Trump said Iran was willing to negotiate following six days of Israeli attacks. Gold traded at $3,366 per ounce, buoyed by the geopolitical climate, while platinum hit highs not seen since 2021.

In fixed income, the yield on the 10-year US Treasury bond stood at 4.39%, while the 2-year yield remained at 3.94%, reflecting stable expectations of rate cuts towards the second half of the year.

In Mexico, the IPyC futures index was trading up 0.15%. The exchange rate stood at 19.07 pesos per dollar, compared to 19.02 the previous day.

Corporate News

– An advocate general at the European Court of Justice recommended dismissing Google’s appeal against the €4.1 billion antitrust fine imposed for abusing Android’s dominance to favor its own applications. The ruling will be issued in the coming months.

– One of SpaceX’s prototypes experienced a failure in its Starship program. The prototype exploded during a routine test in Texas.