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Chilean inflation rose in August and, with the central bank continuing to talk down the possibility of further policy easing, we expect the benchmark interest rate to be left unchanged at 2.50% at next week’s meeting. … Chile Consumer Prices …
8th September 2017
Mexican inflation rose to an 18-year high in August, but the latest increase was driven by another jump in food inflation, rather than a rise in broader price pressures. As such, it is unlikely to cause the central bank to restart its tightening cycle. … …
7th September 2017
The Brazilian central bank cut its benchmark Selic interest rate by 100bp, to 8.25%, last night and confirmed our view that the end of the easing cycle is not far off. As things stand, our forecast is for an additional 75bp cut in the policy rate, to …
The fall in Brazilian inflation to a fresh eighteen-year low in August clears the way for another 100bp cut in the benchmark Selic interest rate, to 8.25%, later today. That said, we suspect the headline inflation rate will soon start to bottom out. … …
6th September 2017
Brazil’s government should continue to make headway in reforming a number of areas of the economy, but we think that the prospects of meaningful reform to the country’s pension system is now no more than 50:50. That would leave the bulk of the work in …
5th September 2017
The 0.8% m/m rise in Brazilian industrial production in July suggests that, after softening in Q2, the economy got off to a decent start in Q3. Meanwhile, economic activity data for Chile add to the evidence that the recovery there continued to strengthen …
Growth in Brazil slowed in the second quarter of this year, but this was always likely given the weak carryover from the end of the first quarter. The big picture here is that there is no sign that the latest political crisis has derailed the recovery and …
1st September 2017
The past month has brought some signs that the continuing political crisis in Brazil is starting to weigh on the more ambitious elements of the government’s reform programme. While President Temer’s administration has already passed labour reforms and …
30th August 2017
Financial markets in Brazil had already had a good month, but this week’s news that the government plans to privatise a host of state-controlled enterprises has helped to push the equity market to a near-record high. Argentine stocks have also recorded …
25th August 2017
Mexican inflation continued to rise in the first half of August, but this was largely the result of another jump in food inflation. As such, it’s unlikely to change the central bank’s view that inflation will soon peak. … Mexico Bi-Weekly CPI …
24th August 2017
After a torrid couple of years, the economies of Latin America have turned a corner and we expect growth to strengthen over the rest of 2017 and into 2018. Inflation has fallen in most countries and should remain low, allowing central banks across the …
23rd August 2017
Data to mid-August suggest that inflation in Brazil is starting to bottom out. That being said, it’s likely to remain well below the central bank’s target over the remainder of this year. … Brazil IPCA-15 …
The pick-up in Chilean GDP growth in Q2 was mainly due to a rebound in mining production following a strike, and there are continued signs of weakness elsewhere in the economy. This adds to the case for a further easing of monetary policy. Meanwhile, the …
18th August 2017
Chile’s central bank left its policy interest rate unchanged at 2.50% for the third consecutive month and, while the accompanying statement gave no hints that rate cuts are being considered, we suspect policymakers remain divided over the need for …
The uptick in Colombian GDP growth in Q2 suggests that the economy is probably over the worst. Even so, the recovery in the second half of the year is likely to be weak and we remain comfortable with our below consensus forecast for the economy to expand …
15th August 2017
With most of the votes in Argentina’s primary legislative elections now counted, it appears that support for President Macri’s ruling coalition has held up better-than-expected, and the peso is likely to rally when markets open later today. But even if …
14th August 2017
Mexican industrial production grew by a below-consensus 0.1% m/m in June, confirming that the sector broadly stagnated over Q2 as a whole. As such, it shouldn’t trigger any major revisions to the provisional estimate of Q2 GDP growth. … Mexico Industrial …
11th August 2017
Peru’s central bank left its policy interest rate unchanged at 3.75% last night, but used the accompanying statement to signal that further easing is on the way. As such, we continue to expect one further 25bp cut in the policy rate, to 3.50%, over the …
Talks to renegotiate Nafta are set to begin on 16th August and look increasingly unlikely to result in major changes that would disrupt Mexico-US trade. Even so, there are still a number of potential sticking points. In this Update we answer five key …
10th August 2017
Mexican inflation nudged up to a fresh eight-year high in July, but this is unlikely to be enough to change the central bank’s view that its tightening cycle is over. As such, we continue to expect the policy interest rate to be left on hold at tomorrow’s …
9th August 2017
Brazilian inflation fell to a fresh decade-low in July but is now close to bottoming out. As such, while it’s a close call, our base case remains that Copom will cut interest rates by 75bps (rather than 100bp) at its next policy meeting in September. … …
Chilean inflation remained below the central bank’s target range in July and the data provided further evidence that underlying price pressure are subdued. Against this backdrop, we continue to expect more interest rate cuts over the coming months. … …
8th August 2017
Chilean economic activity data for June all but confirm that GDP growth rebounded in Q2. And there are tentative signs that a recovery is starting to build outside of the volatile mining sector. … Chile IMACEC …
7th August 2017
The decision by the US Treasury to sanction Venezuelan president Nicholas Maduro was on the more benign end of the spectrum of options reportedly under consideration and is unlikely to have much impact in either coercing regime change or restoring …
2nd August 2017
The fact that Brazilian industry stagnated in month-on-month terms in June is partly payback for strong outturns in April and May. What’s more, industry still expanded by 0.5% q/q in the second quarter, adding to evidence that the latest political crisis …
1st August 2017
Mexico’s economy posted another quarter of solid growth in Q2 and, while the activity is likely to cool in the second half of this year, we remain comfortable with our above-consensus forecast for GDP to expand by 2.2% over 2017 as a whole. … Mexico GDP …
31st July 2017
With the likelihood of major disruption to Mexico-US trade as a result of the renegotiation of NAFTA receding, we’re revising up our forecast for the Mexican peso and now expect it to end the year at 17/$ (previously 19/$). Elsewhere, we’re retaining our …
28th July 2017
The statement accompanying the Colombian central bank’s decision to slow the pace of interest rate cuts to 25bp (from 50bp previously) suggests that policy might not be loosened as aggressively in the upcoming meetings as we had initially expected. …
Inflation has continued to fall across Latin America – our measure of regional inflation (excluding Argentina and Venezuela) dropped below 4% y/y for the first time since 2010 last month. This is due largely to the collapse in Brazilian inflation, which …
26th July 2017
It’s still too soon to say how next year’s presidential elections in Brazil will pan out, but it’s not impossible to see how voters might return an economic populist to the Planalto. If so, there are good reasons to think that the economic and market …
25th July 2017
Mexican inflation remained unchanged in the first half of July which, combined with the latest activity data suggesting that GDP growth slowed in Q2, reinforces our view that Banxico’s tightening cycle is over. … Mexico Bi-Weekly CPI (Jul.) & IGAE …
24th July 2017
The Argentine peso has been the worst-performing EM currency over the past month, and we think it has further to fall. Our forecast is for it to weaken by another 10% against the dollar to 19/$ by end-18 (from 17.2/$ currently). This is a particular …
21st July 2017
Yesterday’s referendum organised by Venezuela’s opposition-controlled National Assembly delivered a resounding defeat to the government, but the vote was unofficial and changes little in practice. Instead, the more important news in recent days has come …
17th July 2017
Peruvian economic activity rebounded strongly in May as the effects of severe flooding at the start of the year started to fade and we expect the recovery to continue over the coming months. … Peru Economic Activity …
14th July 2017
Peru’s central bank cut its policy interest rate by another 25bp, to 3.75%, and we expect at least one further quarter point reduction this year. Elsewhere, the Central Bank of Chile left its policy rate on hold at 2.50% for a second month, but we think …
Around half of the drop in Brazilian inflation over the past year has been driven by a collapse in food inflation, which is now close to bottoming out. But there is also growing evidence that the recession of the past couple of years is starting to weigh …
13th July 2017
We’ve argued for some time that the debate around monetary policy in Mexico would shift from tightening to loosening over the second half of this year. While the potential for market volatility in the run-up to next year’s presidential election may cause …
Mexican industrial production grew by a below-consensus 0.1% m/m in May and, as a result, industry probably broadly stagnated over Q2 as a whole. … Mexico Industrial Production …
12th July 2017
The publication of a national consumer price index by Argentina’s statistics office is a further step towards overhauling its previously discredited inflation data. The short back series limits its use, but the observations we do have broadly corroborate …
The economic surveys in Brazil have fallen since the crisis that has engulfed President Temer’s administration erupted in May, but the hard activity data do not yet point to a sharp downturn in the economy. It’s possible that this could change in time, …
11th July 2017
Mexican inflation rose further above target in June, but there are signs in the breakdown that it is close to peaking. Meanwhile, data also released today showed that inflation in both Brazil and Chile fell sharply last month, reinforcing the case for …
7th July 2017
The second consecutive m/m expansion in the Chilean IMACEC economic activity index suggests that, after a dire Q1, GDP growth probably picked up in Q2. We think the economy should continue to recover over the second half of the year. … Chile IMACEC …
5th July 2017
The stronger-than-expected 0.8% m/m gain in Brazilian industrial production in May, coupled with large upward revisions to April’s data, suggests that the sector may have made a modest positive contribution to GDP growth in Q2. … Brazil Industrial …
4th July 2017
Following two years of recession, Latin America’s economy has shown signs of recovery since the start of this year. And, while political problems are never far from the headlines, we expect economic conditions to continue improving over the coming …
3rd July 2017
The decision by Colombia’s central bank to step up the pace of easing caught the consensus off guard, but supports our view that the policy rate will be cut by more than most expect this year. We remain comfortable with our forecast for it fall to 4.50% …
There is little evidence that the inversion of Mexico’s government bond yield curve means a recession is imminent. But it chimes with our view that economic growth is likely to soften over the remainder of this year, as well as with our forecast for cuts …
30th June 2017
The decision to lower Brazil’s inflation target from 4.5% currently to 4.25% in 2019 and 4.00% in 2020 is clearly a step in the right direction, but it’s worth bearing in mind that inflation targets are only as effective as the central bank’s will to meet …
29th June 2017
Despite the crisis that has engulfed his administration, Brazil’s president, Michel Temer, is managing to cling on to office and there is now a reasonable chance that he serves out his full term to 2018. Mr. Temer has now been formally charged with …
28th June 2017
The sharp drop in Argentine inflation to an 18-month low in May is likely to prompt the central bank to shift into easing mode over the coming quarters. But with core inflation likely to be slow to fall back, we think interest rate cuts will be more …
23rd June 2017
The drop in Brazilian inflation in the first half of June to a fresh decade-low of 3.5% y/y, is Brazilian inflation has fallen below the BCB’s central target for the first time in almost seven years. We expect it to fall further over the coming months, …
