Brazil’s spending review, Argentina’s surplus, Chile rates

A proposed “spending review” in Brazil would, if approved by President Lula, ease fears about the state of the public finances and reduce the chances of aggressive rate hikes by the BCB. Elsewhere, the improvement in Argentina’s fiscal position is proving to be longer-lasting than we’d expected. But absent a weaker peso, it’s hard to see the economy returning to growth and the improvements in Argentina's balance sheets being sustained. Finally, the decision by Chile's central bank to cut rates yesterday was accompanied by dovish forward guidance. We’ve brought forward the cuts in our profile, and now expect a cut at the December meeting.