Amlo unnerves, BCB outlook, new FX forecasts

Yesterday’s comment by Mexican President López Obrador that Banxico would raise its policy rate by 50bp, four hours before the official decision, is not a big deal in itself. But it adds to the sense that he is threatening Mexico’s institutions which could become a growing concern to investors. Elsewhere, comments this week by the Brazilian central bank Governor Campos Neto that the current tightening cycle will end with a 100bp interest rate hike in May (to 12.75%) look a bit premature to us. Finally, we now expect most of the region's currencies to be stronger than we'd previously forecast, but we doubt that they will hold on to all their recent gains.