In a surprise move, Mexico’s central bank slashed the country’s key rate to a record low, supporting the anemic economy and bolstering the country-specific exchange traded fund.

The iShares MSCI Mexico Capped ETF (NYSEArca: EWW) was up more than 3% on Monday to follow up on Friday’s rally. EWW is down 11.8% year-to-date. [Some Bright Spots in Emerging Market ETFs]

The Bank of Mexico cut its key rate by 0.25% to 3.75%, Bloomberg reports.

“The rate cut is anchoring expectations for Mexican yields and provides a ceiling even if U.S. yields rise further,” Bernd Berg, an emerging-markets strategist at Credit Suisse Group AG, said in the Bloomberg article. “The focus of the central bank might have shifted to support growth.”

The central bank stated that economic risks have escalated and the economic expansion could be revised lower from their prior 3.2% to 4.2% forecast. Inflation levels dropped to 3.47% in July, its slow pace since 2009.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.