Hawkish Banxico, Colombia’s austere budget

Mexico’s central bank struck a hawkish tone in the statement accompanying this week’s monetary policy decision, and the markets are pricing in a good chance of another interest rate hike in the near term. But we still think that interest rates will be cut over a 12-18 month horizon. Meanwhile, Colombia’s draft 2019 budget envisages a sizeable fiscal squeeze, which reinforces our non-consensus view that GDP growth will slow next year.