LatAm Weekly – Sept. 23 - 27

Mexico – Banxico delivers a 25 bp cut, but two bo ard members voted for 50 bp cut The central bank of Mexico (Banxico) lowered its policy rate by 25 bps to 7.75%, in line with our expectations and the market’s. Also, in line with our expectations, two of the five- member board voted to cut the policy rate by 50 bps. We suspect that Heath and Esquivel were the two board members who voted for a 50 bp cut. Chile – BCCh minutes suggest an additional 25 bp cut is more likely in the future In the minutes published on the morning of September 23rd, BCCh board members explain that a weakening in domestic demand growth and a deterioration of the external scenario , which is important given Chile’s high-degree of openness , merited a 50 bp cut to a 2% policy rate. Brazil – Minutes confirm our view of 75 bps of additional rate cuts Given last week’s dovish communique, we now forecast two additional cuts: one of 50 bps at the October 30th meeting and a 25 bp cut at the December 11th meeting. Therefore, our forecasted terminal value is now 4.75% versus 5.25% previously.