Assessing the impact of low oil prices on Mexico

The plunge in oil prices is yet another drag on Mexico’s freefalling economy, and may hasten a move by Pemex to restructure its external debts. The government’s lacklustre response to the economic crisis is forcing Banxico to do the heavy lifting to soften the blow. Following on from its 50bp emergency rate cut yesterday, we expect a further 150bp of easing this year, taking the policy rate to 4.50%.