Fed action likely to affect policy plans in Brazil and Mexico
In spite of weaker currencies, both countries may require lower rates to tackle weaker growth and higher rate differentials
Latin America’s two largest central banks are expected to resume rate cuts due to lower growth and the US Fed’s recent rate cut, in spite of weaker exchange rates.
Analysts highlight that both the Central Bank of Brazil (BCB) and Bank of Mexico (Banxico) have scant monetary policy space to stimulate their economies. However, the Fed’s 50 basis point emergency rate cut, implemented earlier this week in a bid to cushion the impact of the coronavirus, may have increased policy-makers’ willingness
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