Mexico Economic Outlook. Second quarter 2020

Summary

Pandemic behavior forecasts according to statistical models. Sharp decline in economic activity; currently no adequate countercyclical policies. As we predicted, downward pressure on inflation is dominating; Banxico should accelerate rate cuts.

Key points

• Key points:
• Long-term interest rates will continue to fall, though the slope will remain high due to higher risk premiums
• The negative differentiation in the peso will fall slightly; we anticipate lower exchange rates by year end

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