The hawkish tone of the Banxico minutes released this week adds weight to our view that the easing cycle in Mexico will be very gradual and we think it's most likely that rates will be kept on hold at the next meeting in May. Meanwhile, Fitch’s downgrade of Panama’s sovereign foreign currency credit rating to junk status reaffirms the concerns we’ve raised about the country’s fiscal position. Finally, while Peru’s latest political scandal has had little impact on local financial markets, the big risk is that it triggers social unrest which could stop inflation and interest rates from falling.
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