The hawkish tilt by Mexico’s central bank at its meeting yesterday, when it raised its raised its policy rate by 50bp (to 7.00%), suggests that Banxico may soon shift its tightening cycle into a higher gear. Elsewhere, Peru’s central bank also increased its policy rate by 50bp on Thursday, to 5.00%, and we expect a further 200bp of hikes in this cycle. Finally, the tightening cycle continued in Argentina yesterday with a 200bp rate hike and, with policymakers starting to take inflation targeting more seriously, we think that the central bank will gradually move real rates into positive territory in the coming quarters.
EM Drop-In (17th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. Register now.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services