Mexican monetary policy is becoming unstuck. That might be where the good news ends.

Until recently an interest-rate cut was thought to be on the table, as the nation’s economy needed a boost. Now, thanks to chaos north of the border, the economy’s forecast is unclear, and borrowing costs are likely to remain frozen, or even rise. Geography really isn’t Mexico’s friend these days.

The swing factor appears to be the renewed risk that Nafta—the trade accord on which Mexico built an entire national model—unravels. As recently as late summer, Mexican officials thought they had escaped the worst fate, because the U.S. and Canada seemed willing to renegotiate—rather than a unilateral pullout by Donald Trump.

Let’s back up a bit. I wrote in August that a rate cut was in the offing—and deserved—in Mexico and that politics was getting in the way. First, a strong candidate to succeed Agustin Carstens as Bank of Mexico governor had to decide whether to run for president or run the central bank. Depending on the answer to that, President Enrique Pena Nieto had to select Carstens’s successor so Carstens could move, as planned, to the Bank for International Settlements in Switzerland.

It took a while, but both were resolved within hours of each other this week. Finance Minister Jose Antonio Meade said he’ll seek the ruling party’s nomination for president next year. With Meade no longer available to lead the central bank, Pena Nieto promoted one of the bank’s deputy governors, Alejandro Diaz de Leon.

Diaz de Leon is seen as a technocrat and a tad dovish, meaning he is more inclined to lower borrowing costs than lift them. But his initial comments could be read a number of ways. Diaz de Leon told Radio Formula that inflation is less likely to “shock” than was the case earlier this year. He also told Reuters that price increases may not abate as forecast. (I’m sympathetic to Harry S. Truman’s desire for an economist who could not say “on the other hand….”)

So Mexico resolved the political impasse, but maybe only to find a policy one. If Diaz de Leon is truly inclined to cut rates, he might also bump against sentiment on the bank’s monetary policy committee, which took what Goldman Sachs Group Inc. described as a “hawkish tone” in minutes of its Nov. 9 meeting. The main concerns were that the peso would once again weaken, spurring inflation, in the event the Federal Reserve kept raising U.S. rates and Mexico didn’t keep up. To be fair, that one isn’t a new issue, but its importance comes and goes.

A secondary—and growing—concern from the minutes is that Nafta could blow up again. It was worries about this during the 2016 U.S. presidential campaign that caused the peso to plunge and the Bank of Mexico to jack up rates.

Trump had threatened to pull out, but that threat fizzled— under pressure from border and farm-state Republicans. With talks not going so well, the worry is back. Nafta is more than a trade pact for Mexico; it’s been a central organizing principle. Its end would do more than alter the trade balance. It would be an existential issue.

Mexico could use a reduction in interest rates. Gross domestic product shrunk last quarter after two big earthquakes and a hurricane. The peso is up about 12 percent this year after tumbling 17 percent last year. Inflation is 6.4 percent, well above the 3 percent target, but showing signs of leveling out.

It would be tragic if Mexico removed domestic political roadblocks to a cut only to encounter Donald Trump standing in the way. The curse of geography.

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