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Inflation picture becoming more benign The raft of June inflation figures released across the region this week were encouraging. Headline inflation fell in Mexico , Colombia and Chile (and by more than expected in the latter two) while inflation in Brazil …
11th July 2025
We think the outperformance of Mexican assets and the peso since “Liberation Day”, owing to large tariff exemptions for exports to the US, has largely run its course. Instead, we think the weak economic backdrop in Mexico and the risk of renewed …
Tightening cycle probably over, but currency now the key risk There’s little in the Brazilian June CPI print that changes our view that last month’s hike marked the end to Copom’s tightening cycle. But a lot will now depend on how the trade dispute with …
10th July 2025
President Trump’s threat to put a 50% tariff on imports from Brazil is less about trade disputes and more about political and policy disagreements, and so it’s harder to see an off-ramp for Brazil compared with other countries that received tariff …
Chile’s economy is the most exposed globally to US copper import tariffs. But while the impact would probably be small, it would add to deep-seated problems facing the copper sector. Our commodities covered the implications of a 50% tariff on the copper …
9th July 2025
More rate cuts coming, but in smaller steps The fall in Mexico’s headline inflation rate, to 4.3% y/y in June gives Banxico room to continue its easing cycle in the coming months. But with inflation still above target and core inflation rising, we think …
Downside inflation surprise paves the way for rate cut later this month The larger-than-expected fall in Chilean inflation, to 4.1% y/y, in June supports our view that policymakers will resume its easing cycle with a 25bp cut, to 4.75%, later this month. …
8th July 2025
Colombia’s shift from being a staunch US ally to embracing China has been one of the starkest geopolitical moves of the last few years. This may put Colombia into President Trump’s crosshairs for narcotics decertification and/or higher US import tariffs …
7th July 2025
Chile: communist scores surprise primary win The positive market reaction to the victory for communist candidate, Jeannette Jara, in the Chilean governing coalition’s presidential primary election seems surprising at first sight. The peso is up by c.1% …
4th July 2025
Our views on the outlook for monetary policy in Latin America have been on the hawkish side for some time, but we now think that there’s scope for interest rates in many countries in the region to come down by more than most expect. The key exception to …
2nd July 2025
Mexico’s exports: so far, so (relatively) good Mexico’s trade figures for May released on Thursday showed that exports have continued to hold up well despite higher US import tariffs. Overall goods exports were down by a modest 0.4% y/y in dollar terms. A …
27th June 2025
Banxico cuts by 50bp, but tone slightly less dovish Mexico’s central bank (Banxico) lowered its policy rate by another 50bp, to 8.00%, at today’s meeting, but the accompanying communications were slightly less dovish and point to a slower pace of easing …
26th June 2025
Inflation eases, Copom’s tightening cycle over The fall in Brazil’s headline inflation rate to 5.3% y/y in the first half of June reinforces our view that the central bank won’t push through further interest rate hikes. An easing cycle is likely to begin …
Data from the first two months of US tariffs being in effect suggest that both Canadian and Mexican manufacturers were struggling to make their exports USMCA-compliant, which poses a downward risk to our GDP forecasts for those countries. The US first …
24th June 2025
Rise in inflation won’t stop 50bp cut on Thursday The jump in Mexican inflation to 4.5% in the middle of this month won’t be enough to prevent Banxico from proceeding with a (clearly-signalled) 50bp interest rate cut at its meeting later this week. But …
Copom & BCCh: hawks & doves This week's rate decisions in Chile and Brazil showed a stark contrast in messaging. While Chile’s central bank (BCCh) left its policy rate unchanged at 5.00%, its communications were relatively dovish. It sounded less …
20th June 2025
Copom provides a hawkish hint that tightening cycle is over Brazil’s central bank opted, as we had expected, for a 25bp hike in the Selic today to 15.00% and, while the tightening cycle is probably now over, Copom went out of its way to push back against …
18th June 2025
Mexico has weathered the US’s shift toward protectionism better than many feared just a few months ago, but the economy is still likely to struggle this year. While the rest of the region is relatively insulated from the trade war, lower commodity prices …
17th June 2025
The Colombian government’s fiscal plans unveiled late on Friday will have dashed any lingering hopes that policymakers would try to stabilise the public debt-to-GDP ratio, at least ahead of next year’s election. This points to further downward pressure on …
16th June 2025
Mexico’s exports holding up well … so far Figures out this week provided further evidence that Mexico's exports have been relatively resilient in the face of US import tariffs. Auto exports (compiled by local trade body AMIA) were down 3% y/y in May …
13th June 2025
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
We'll be online discussing the outlook for Latin American economies and financial markets in an online briefing on Wednesday 18th at 10am ET/3pm BST . Sign up here . Overview – Mexico has emerged from the US’s shift to protectionism better than was feared …
12th June 2025
Colombia’s fiscal problems have returned to the spotlight amid rumours that the government will suspend the fiscal rule. This has triggered a sell-off in the bond market, but it doesn’t look like the deterioration in the fiscal situation has been fully …
10th June 2025
Inflation drops, but Copom likely to hike one final time next week The slightly larger-than-expected fall in Brazil’s headline inflation, to 5.3% y/y, was driven by weaker food inflation. Underlying price pressures continued to strengthen and, against …
Inflation rise won’t prevent further cuts from Banxico Mexico’s headline inflation rate jumped to 4.4% y/y in May but this was mainly driven by stronger non-core prices and so is unlikely to trouble officials at the central bank. Indeed, with the economy …
9th June 2025
Colombia: will the government deliver? The Colombian government’s fiscal plans due to be published next Friday will receive particular attention (and scrutiny) given the country’s increasingly fragile public finances – the latest monthly figures show that …
6th June 2025
Brazil’s monetary tightening cycle is very close to being (or may already be) over, and attention is quickly turning to when and how far Copom will lower interest rates. Historically, the market has tended to underestimate how far rates are lowered – and …
4th June 2025
A turning point for Mexico’s judiciary Mexicans head to the polls on Sunday to elect almost 900 federal judicial positions and thousands of positions at the local level. Roughly the same number of posts will be up for grabs in 2027. This huge …
30th May 2025
Bumper growth keeps door open for another rate hike The 1.4% q/q expansion in Brazil’s GDP was partly driven by a boom in the agricultural sector at the start of the year, which is likely to unwind. But it now looks like the economy is on course to expand …
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Europe is being buffeted by geopolitical and geoeconomic shifts but, …
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
29th May 2025
We doubt that the region’s strong start to the year will be sustained given the backdrop of lower commodity prices, tight policy and, in Mexico’s case in particular, uncertainty around US trade policy. Despite the recent dovish shift by many of the …
27th May 2025
Easing inflation increases chances of a hold at Copom’s June meeting The fall in Brazil’s headline inflation rate to 5.4% y/y in the first half of May means that the risks to our forecast for a final hike in June are skewed to the downside. But if the Q1 …
Copom: one final hike? Brazil’s Q1 GDP data due next Friday should show that the economy recorded strong growth in Q1, supporting the case for the central bank to deliver one final hike in this cycle. Having slowed sharply at the end of last year, …
23rd May 2025
Banxico looks set for another cut despite rise in inflation The larger-than-expected rise in Mexico’s headline inflation rate in the first half of May, to 4.2% y/y, was driven in large part by non-core components and is unlikely to sway Banxico’s …
22nd May 2025
The low public support for (left-wing) incumbents in many of Latin America’s largest economies, taken together with weak public finances, suggests that the wave of the upcoming elections could act as a catalyst for a rebound in (beaten up) financial …
21st May 2025
The proposed 5% US tax on remittance outflows would have a particularly large negative impact on Central American economies such as Honduras, Guatemala and El Salvador. Remittance flows could plausibly drop by around 1% of GDP in these countries. And …
A strong start to the year The stronger-than-expected 0.7% q/q expansion in Chile’s economy in Q1 on the back of robust domestic demand supports our view that Chile’s central bank will leave its policy rate on hold for a bit longer. But the recent dovish …
19th May 2025
Copom minutes intensify debate over June meeting The minutes to the Brazilian central bank’s monetary policy meeting last week, at which the Selic rate was hiked by 50bp, have added further fuel to the debate over whether the tightening cycle is already …
16th May 2025
Growth concerns leave the door open for another 50bp cut in June Mexico’s central bank (Banxico) lowered its policy rate by another 50bp, to 8.50%, at today’s meeting and the accompanying communications underlined that policymakers’ concerns have shifted …
15th May 2025
The impressive progress made by Argentina’s President Javier Milei towards restoring macro stability should set the scene for stronger and less volatile growth than in the past 10-15 years. But we think the analyst consensus has turned too optimistic on …
The recent climbdown has left the effective US tariff rate on the rest of the world at around 15% as opposed to the 27% which was threatened at the height of this year’s trade war. While this is still the highest since the 1930s, it is unlikely to cause a …
13th May 2025
The latest survey data out of Mexico have been woeful and, while high-frequency hard data suggest that activity hasn’t fared as badly as might have been feared, the bigger picture is that the economy is very weak. This is likely to weigh heavily on …
Global Trade Stress Monitor …
The US and China have each suspended for 90 days all but 10% of their Liberation Day tariffs and cancelled other retaliatory tariffs. This is a substantial de-escalation. However, the US still has much higher tariffs on China than on other countries and …
12th May 2025
Lower oil prices a mixed blessing The announcement from OPEC+ over the weekend that it will increase oil supply further in June briefly caused the price of Brent crude to drop below $60pb. It has since recovered to c.$63pb at the time of writing, but that …
9th May 2025
Brazil’s current account deficit has widened sharply over the past twelve months and we think it could reach 4.0-4.5% of GDP over the next couple of years. This leaves the real vulnerable to renewed falls, especially if concerns about the health of the …
8th May 2025
Inflation rises, but Banxico still on course for a 50bp cut next week Mexico’s headline inflation rate edged up to 3.9% y/y in April, but we think that the challenging growth outlook and the relative resilience in the peso leave the door open for another …
Copom hikes again, but tightening cycle near an end (if not already over) Brazil’s central bank hiked the Selic rate by a further 50bp, to 14.75%, today and officials made clear in the accompanying statement that the tightening cycle is near an end. We …
7th May 2025
Hold in Chile, BanRep turns dovish Andean central banks sent very different signals this week. In Chile, the central bank left its policy rate unchanged at 5.00% as expected. And policymakers still sounded somewhat concerned about inflation, highlighting …
2nd May 2025
