*

Brazil cuts rates by 50 bps, may change course after May

*

Mexico central bank cuts rates to 11%

*

Turkey's surprise rate hike boosts bonds, the lira

*

Colombia central bank decision due Friday

(Updated at 4pm ET/2000 ET)

By Ankika Biswas and Lisa Pauline Mattackal

March 21 (Reuters) - Mexico's peso recouped some of the

day's losses after an expected interest rate cut on Thursday but

remained down on the day, along with most regional currencies,

as the dollar recovered ground.

The Bank of Mexico, or Banxico, cut benchmark interest rates

by 25 basis points to 11%, the first rate cut since the bank

embarked on a tightening cycle in 2021.

Banxico said it will thoroughly monitor inflationary

pressures and that at its next monetary policy meetings, "it

will make its decisions depending on available information."

The peso was down 0.4% on the day, although

regaining some ground lost earlier in the session.

Further pressuring emerging market currencies, the dollar

index recouped Wednesday's losses after Fed Chair Jerome

Powell said recent high inflation readings had not altered the

central bank's stance as it stayed on track for three interest

rate cuts.

Juan Perez, director of trading at Monex USA, also pointed

to the Swiss National Bank's unexpected rate cut that likely

puts pressure on most developed economies to start easing and

also on emerging markets to further loosen their monetary

policy.

Brazil's real fell 0.2% to 4.9788 per dollar after

its central bank cut the benchmark rate by 50 basis points on

Wednesday, while flagging it may change the course of the

current easing cycle after May.

"For now, we continue to expect 50 bps to be the default for

rate cuts in the coming months; however, the bar to slow the

pace is now lower," Wilson Ferrarezi, Brazil economist at TS

Lombard said.

Colombia's rate decision is due on Friday, with a Reuters

poll showing analysts expect the central bank to slash rates by

twice as much as in previous months. Colombia's peso lost

0.8%.

Chile's peso weakened over 1%.

MSCI's basket of Latin American stocks edged

down 0.1%.

Meanwhile, Turkey unexpectedly raised interest rates by 500

basis points to 50%, citing a deteriorating inflation outlook

and pledged to tighten further if need be.

The lira firmed to 31.91 per dollar - its

strongest level since March 7 - after the decision,

international dollar-denominated bonds extended their earlier

gains, and the Istanbul stock market climbed more than

2%.

"With local elections coming up, very few were expecting a

rate rise. There has been a debate over how independent the

central bank can be from politics so this move is going to

reassure investors," said Cagri Kutman, Turkish market

specialist at KNG Securities.

Highlights:

**

Brazil holds growth forecasts at 2.2% for 2024, 2.8% for

2025

** Sri Lanka bonds jump as debt restructuring talks set for

next week

Key Latin American stock indexes and currencies at 2000 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1.37

1046.22

MSCI LatAm -0.12

2527.12

Brazil Bovespa -0.74

128171.65

Mexico IPC 0.03

56636.85

Chile IPSA -0.24

6485.92

Argentina MerVal 3.38

1225265.41

Colombia COLCAP 0.49

1315.17

Currencies Latest Daily %

change

Brazil real -0.20

4.9788

Mexico peso -0.42

16.7430

Chile peso -1.08

972.80

Colombia peso -0.8

3900.68

Peru sol 0.15

3.6725

Argentina peso (interbank) 854.0000 -0.06

Argentina peso (parallel) 1010 1.98