The recent turmoil in the financial markets has re-shaped the debate on how far interest rates may need to rise in Latin America. We still expect one or two more hikes in Peru, Colombia and perhaps even Chile, but rates have probably now peaked in Brazil. Meanwhile, in Mexico the deteriorating outlook for the US economy supports our long-held view that interest rates will remain at their current record low of 4.5% for longer than the market (and consensus) expects. Indeed, we now think that BANXICO will keep rates on hold until 2013.