Mexico Rate Cuts: Market’s Wrong If Peso Cooperates, BNP Says

06/28/2017 Barron’s

pesoMexico’s central bank raised its benchmark interest by 25 basis points last week, and many economists think Banxico’s hike last week was the last and that the benchmark interest rate will hover at 7%.

But BNP Paribas, which has been bullish on the Mexican peso, disagrees. The Mexican peso has rallied to fresh highs this week, has strengthened by 16% against the U.S. dollar this year. Marcelo Carvalho, head of emerging market research, and Felipe Klein, an economist, “pencil in steady 25-basis-point cuts at each of the eight regular policy meetings during the course of 2018.”

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