Rising U.S. Interest Rates

Data

Between the fourth quarter of 1993 and the first quarter of 1995 the U.S. Federal Funds rate nearly doubled. Between January 1994 and the first week of December, 1994, interest rates on both Mexican dollar-denominated debt (tesebonos) and Mexican peso-denominated debt (Cetes) followed U.S. rates upwards. The upward movement in interest rates may have depressed aggregate demand and certainly increased public sector borrowing costs.

Mexican Economic Crisis