Mexican interest rate cut is probably a one-off

We do not think that today’s unexpected interest rate cut by the Mexican central bank signals the onset of an aggressive easing cycle. Indeed, with forward-looking indicators suggesting thateconomic growth will be stronger in the second half of this year, we suspect that today’s cut may proveto be a one-off. As a result, we expect interest rates to remain unchanged at 3.75% for a prolongedperiod with only gradual hikes towards 4.25% pencilled in for late-2014.