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Inflation jump keeps door open for more rate hikes The sharp rise in Brazilian inflation to 5.1% y/y in February is likely to be followed by further increases in the coming months. Our base case is that next week’s Copom meeting will see the final (100bp) …
12th March 2025
Period of strong growth comes to an abrupt end The sharp slowdown in Brazil’s GDP growth, to just 0.2% q/q, in the final quarter of last year confirms that the economy’s recent period of strong growth has come to an abrupt end. We now think the economy …
7th March 2025
Another 50bp cut on the cards The rise in Mexico’s headline inflation rate, to 3.8% y/y in February was entirely driven by non-core inflation and therefore won’t be a major concern for the central bank. Indeed, we think that the weakness in the economy …
President Donald Trump's decision to grant a one-month exemption to the Big Three Automakers (Ford, GM & Stellantis) is something of a disappointment given the earlier heavy hints from his Commerce Secretary Howard Lutnick that more widespread relief was …
5th March 2025
Inflation jumps, Copom to deliver more tightening The jump in Brazil’s headline inflation rate to 5.0% y/y in the first half of February means Copom will almost certainly press ahead with another 100bp hike in the Selic rate to, 14.25%, at its March …
25th February 2025
Odds shifting in favour of another 50bp cut The fall in core inflation in Mexico in the first half of February combined with weak economic activity, means that Banxico is likely to press ahead with another 50bp cut at its meeting next month. The outturn …
24th February 2025
The decision by the US and Russia to “lay the groundwork” to end the war in Ukraine marks a potentially significant turning point after three years of conflict. Negotiations will take time and the macroeconomic implications will depend on the features of …
18th February 2025
Fall in inflation won’t stop Copom from hiking again in March The fall in Brazil’s headline inflation rate in January, to 4.6% y/y, was mainly due a drop in housing inflation and is unlikely to prevent the central bank from delivering another 100bp hike …
11th February 2025
Banxico steps up easing as it adopts a more dovish tone Mexico’s central bank stepped up the pace of monetary easing to 50bp at today’s meeting, lowering the policy rate to 9.50%, and the overall communications were dovish. While a tariff-induced drop in …
6th February 2025
GDP collapse argues for larger 50bp cut The much larger-than-expected 0.6% q/q drop in Mexico’s GDP in Q4 is likely to strengthen the argument for a 50bp interest rate cut, to 9.50%, at next week’s Banxico meeting. That now looks like the most likely …
30th January 2025
Copom sticks to its promise Brazil’s central bank delivered on its pledge to deliver another 100bp hike to the Selic rate, to 13.25%, and another 100bp increase at March’s Copom meeting is all but certain. For now, we are sticking with our view that that …
29th January 2025
Inflation eases, but Copom still set to deliver 100bp hike next week Brazil’s headline inflation rate eased to 4.5% y/y in the first half of January, but signs that underlying price pressures continued to build mean that Copom will press ahead with …
24th January 2025
Easing inflation makes February cut highly likely The fall in Mexican inflation in the first half of January, to 3.8% y/y, means that Banxico is likely to continue its easing cycle next month. But with the Fed set to pause its pause its cutting cycle and …
23rd January 2025
Copom to press ahead with more hikes despite fall in inflation The fall in Brazil’s headline inflation rate in December, to 4.8% y/y, coupled with the rebound in the real over the past couple of weeks, won’t be enough to stop Copom following through with …
10th January 2025
Fall in inflation paves the way for further easing The larger-than-expected fall in Mexico’s headline inflation rate, to 4.2% y/y in December keeps the door open for another 25bp cut at Banxico’s February meeting. But a lot will hinge on moves on the …
9th January 2025
Fall in inflation paves the way for further easing The fall in Mexican inflation in the first half of December, to 4.4% y/y, gives Banxico room to continue to ease monetary policy. But we expect Banxico to continue to cut in 25bp steps, rather than step …
23rd December 2024
Banxico cuts, but pace of easing unlikely to be stepped up Mexico’s central bank unanimously decided to deliver another 25bp interest rate cut, to 10.00%, at today’s meeting and the statement flagged that the easing cycle will continue in the coming …
19th December 2024
Fiscal fears and overheating economy trigger a bumper hike Brazil’s central bank stepped up the pace of tightening with a larger-than-expected 100bp hike, to 12.25%, to the Selic rate and made clear that there will be at least two more 100bp increases, to …
11th December 2024
Rising inflation points to Copom stepping up tightening tomorrow The further rise in Brazil’s inflation rate, to 4.9% y/y, in November alongside the weakness in the real and strong economic growth mean that Copom is nailed on to step up the pace of …
10th December 2024
Fall in inflation gives Banxico room to deliver another 25bp cut The fall in Mexico’s headline inflation rate, to 4.6% y/y in November, combined with the relative resilience in the peso since the US election means that Banxico is likely to press ahead …
9th December 2024
Another strong quarter points to larger Selic hike The strong 0.9% q/q expansion in Brazil’s GDP in Q3 will add to the central bank’s concerns that the economy is running too hot. Alongside rising inflation and the sell-off in local financial markets in …
3rd December 2024
Inflation jumps, Selic heading higher The rise in Brazil’s headline inflation rate, to 4.8% y/y, in the first half of November was partly driven by a further increase in underlying core services inflation and means that Copom is likely to raise the Selic …
26th November 2024
Fall in inflation leaves door open for December cut The larger-than-expected fall in Mexican inflation in the first half of November, to 4.6% y/y, alongside easing core price pressures and the relative resilience in the peso mean that Banxico is likely to …
22nd November 2024
Banxico cuts, scope for further easing rests on the peso Mexico’s central bank delivered another 25bp interest rate cut at today’s meeting, to 10.25%, and it left the door open to further easing over the coming months, although a lot will depend on moves …
14th November 2024
Inflation rises, more rate hikes on the cards The further rise in Brazil’s headline inflation rate to 4.8% y/y in October means that the central bank is almost certain to deliver additional interest rate hikes at its upcoming meetings. The risks are …
8th November 2024
Easing core inflation and peso recovery leave 25bp cut in play The larger-than-expected rise in Mexico’s headline inflation rate, to 4.8% y/y in October, was driven entirely by a jump in agricultural price inflation. Core inflation edged down last month …
7th November 2024
Copom hikes again Brazil’s central bank hiked the Selic rate for a second consecutive meeting, by 50bp to 11.25%, today but this has more to do with the domestic macro backdrop and shoring up monetary policy credibility than a response to the market …
6th November 2024
November rate cut hinges on US election The stronger-than-expected 1.0% q/q expansion in Mexico’s economy in Q3 confirms that the economy pulled out of the slump seen in the first half of the year last quarter. We still think the conditions are …
30th October 2024
Banxico’s space to cut hinges on US election The fall in Mexican core services inflation in the first half of October in principle gives Banxico space to press ahead with another 25bp rate cut next month, but much will hinge on the outcome of the US …
24th October 2024
Brazil inflation rises, more Selic hikes incoming The rise in Brazil’s headline inflation rate to 4.4% y/y in September was mainly due to drought-related effects on food and electricity prices but, even so, it will reinforce the hawkishness of Copom and …
9th October 2024
Inflation and growth backdrop supports further easing Mexico’s central bank delivered another 25bp interest rate cut at today’s meeting, to 10.50%, and the communications suggest that it will continue to ease policy over the coming months. We expect the …
26th September 2024
Inflation falls, but Copom still on course to deliver further rate hikes The larger-than-expected decline in Brazil’s headline inflation rate, to 4.1% y/y, in the first half of September is unlikely to prevent Copom from raising interest rates further …
25th September 2024
Fall in inflation paves the way for another rate cut The larger-than-expected fall in Mexican inflation in the first half of September, to 4.7% y/y, supports our view that Banxico will continue its easing cycle with another 25bp cut on Thursday. The …
24th September 2024
Copom hikes, leaves door open to more Just four months after last lowering interest rates and hours after the US Federal Reserve started its easing cycle with a bang, Brazil’s central bank delivered a 25bp hike to the Selic rate, to 10.75%, as officials …
18th September 2024
Further rise in services inflation seals the deal on a rate hike Brazil’s headline inflation dropped back to 4.2% y/y in August, but there was yet another increase in underlying services inflation which sets the stage for an interest rate hike at next …
10th September 2024
The larger-than-expected fall in Mexico’s headline inflation rate, to 5.0% y/y in August, alongside the likelihood of a Fed rate cut next week, mean that Banxico is on track to lower its policy rate by another 25bp at its meeting later this month. The …
9th September 2024
Bumper growth in Q2 tilts odds towards rate hike The much stronger-than-expected Brazilian GDP figure for Q2, of 1.4% q/q, means that the economy now appears to be on course to expand by 3% over the year as a whole. The flip side is that it will heighten …
3rd September 2024
The small fall in Brazil’s headline inflation rate, to 4.35% y/y in the first half of August, alongside the prospects of a Fed rate cut next month, means that Copom is most likely to leave rates unchanged (rather than hike) at its meeting next month. The …
27th August 2024
The fall in Mexican inflation in the first half of August, to 5.2% y/y, alongside clear signals from the Fed that it will start loosening monetary policy next month, supports our view that Banxico will continue its easing cycle with another 25bp cut in …
22nd August 2024
The 0.6% q/q fall in Chilean GDP in Q2 is mainly payback for a strong Q1, and we expect a return to positive growth in Q3. Still, the Q2 figures should the central bank confidence to deliver a couple of more cuts this year. The outturn was in line with …
19th August 2024
Strong domestic demand means BanRep likely to maintain the pace of easing The Colombian economy isn’t nearly as weak as the meagre 0.1% q/q rise in headline GDP in Q2 would suggest; there was a large drag from net trade while domestic demand remained very …
15th August 2024
Rise in inflation will add to Copom’s hawkishness, but rate hike unlikely The rise in Brazil’s headline inflation rate to 4.5% y/y in July was mainly driven by a pick-up in underlying core services inflation which will do little to quell the hawkishness …
9th August 2024
Easing cycle continues despite peso weakness Mexico’s central bank opted to reduce its policy rate by 25bp, to 10.75%, at today’s meeting and the statement generally retained the moderately dovish tone from the last one. We think further rate cuts are …
8th August 2024
Rise in inflation leaves Banxico decision on a knife edge The rise in Mexico’s headline inflation rate, to 5.6% y/y in July, alongside the weakness in the peso means that Banxico’s interest rate decision later today will be a very close call between a cut …
Copom on hold, rate cuts off the cards for the rest of 2024 Rising inflation, a worsening fiscal position and a slump in the real prompted Brazil’s central bank to leave the Selic rate at 10.50% today and strike a more hawkish tone in the accompanying …
31st July 2024
Weak Q2 makes August rate cut likely The weaker-than-expected 0.2% q/q expansion in Mexico’s economy in Q2 means that Banxico is likely to resume its easing cycle at next week’s Board meeting with a 25bp cut to 10.75%. The outturn was a little weaker …
30th July 2024
Inflation rises, no more cuts this year The stronger-than-expected rise in Brazil’s headline inflation rate, 4.45% y/y in the first half of July, was mainly driven by a pick-up in underlying core services inflation. This, coming alongside fiscal concerns …
25th July 2024
The larger-than-expected rise in Mexican inflation in the first half of July, to 5.6% y/y, was driven entirely by a jump in non-core inflation; core inflation fell. Our base case remains that Banxico will resume its easing cycle next month (as has been …
24th July 2024
Inflation increases again, Copom in no mood to restart easing The rise in Brazil’s headline inflation rate to 4.2% y/y in June was a little softer than expected but the recent weakness in the real and mounting fiscal concerns means that there is no chance …
10th July 2024
Inflation rise doesn’t rule out August rate cut The larger-than-expected rise in Mexico’s headline inflation rate, to 5.0% y/y in June, was mainly due to a surge in agricultural inflation; core inflation edged down last month. While there’s still a lot of …
9th July 2024
