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FX sell-off to trigger hike in Mexico, but Brazil to hold

The latest sell-off in the Mexican peso tips the balance towards policy being tightened at Thursday’s central bank meeting. We’re changing our forecast and now expect a 50bp hike in the policy interest rate to 8.00%. In contrast, recent comments from policymakers suggest that Brazil’s central bank will look through the recent dip in the real and leave interest rates on hold at tomorrow’s Copom meeting.

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