On Challenges Facing Mexico & Brazil

Mexico’s economy faces a lot of headwinds at this point: sluggish growth and rising inflation, a central bank that’s divided on how to address stagflation, geopolitical and trade-related uncertainties, a sliding peso, a surging budget deficit, a Moody’s debt downgrade to just one tier above junk, and a domestic investment picture that William calls “quietly alarming.” Defeating stagflation and boosting confidence will be an uphill climb. … Also: Brazil’s central bank has signaled more interest-rate cuts even as it forecasts high and climbing inflation. It’s a bold bet that the inflation problem will prove temporary. But another rate cut could entrench it and jeopardize the bank’s credibility.