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Easing cycle begins but rate cuts to be slow going Mexico’s central bank finally embarked on an easing cycle today, lowering its policy rate by 25bp to 11.00%, but the fact that the vote was split and that Banxico didn’t commit to further rate cuts …
21st March 2024
Copom points to smaller cuts ahead The Brazilian central bank’s 50bp cut in the Selic rate to 10.75% today was never in doubt, but the change in the forward guidance supports our view that the easing cycle will slow to 25bp cuts soon (probably at the June …
20th March 2024
Weak end to 2023, but better start to 2024 The 0.1% q/q rise in Chilean GDP confirms that the economy had a stop-start recovery over the course of last year, but we think that it will make more solid gains over the course of 2024. Our growth forecast for …
18th March 2024
Core inflation strength will worry Copom The Brazilian inflation data for February, which showed that the headline rate held steady at 4.5%, provided further evidence that underlying inflation pressures remain strong. This supports our view that interest …
12th March 2024
Inflation drops, Banxico on course for rate cut this month The drop back in Mexico’s headline inflation rate to 4.4% y/y in February, alongside the weakness of the latest activity data, leaves Banxico on course to cut interest rates at its next Board …
7th March 2024
Consumer resilience comes to an end The stagnation in Brazil’s GDP in Q4 and the decline in household consumption confirmed that the economy lost momentum sharply and, while we expect a pick-up in growth in the coming quarters, we’re now more confident in …
1st March 2024
Further signs that underlying inflation isn’t easing The breakdown of Brazil’s February mid-month inflation reading of 4.5% y/y showed that core services inflation remained elevated. And while further 50bp cuts in the Selic rate next month (to 10.75%) and …
27th February 2024
Inflation drops back, March rate cut in play The drop back in Mexico’s headline inflation rate to 4.5% y/y in the first half of February leaves Banxico on course to begin an easing cycle at March’s Board meeting. That said, the rise in core services …
22nd February 2024
Weak end to 2023 The stagnation in Colombia’s GDP in Q4 confirmed that the economy remained very weak at the end of last year and we think the recovery this year will be slower than most anticipate. At the margin, the weakness of the latest activity …
15th February 2024
Rates on hold, Banxico to stay cautious even once easing cycle begins Mexico’s central bank left interest rates unchanged at 11.25% again today but the accompanying statement further opened the door to the start of an easing cycle, probably at the next …
8th February 2024
Mexican inflation drops, but Banxico to hold firm later today The jump in Mexico’s headline inflation rate to 4.9% in January means Banxico won’t feel comfortable enough yet to start an easing cycle at the Board meeting later today. Elsewhere, the further …
Sharp slowdown increases chances of Banxico cut next week The sharper-than-expected slowdown in Mexico’s GDP growth, to just 0.1% q/q in Q4, is likely to be followed by continued sluggish growth over the coming quarters. At the margin, the data increase …
30th January 2024
Fall in inflation keeps another 50bp cut on the cards The slightly larger-than-expected decline in Brazilian inflation in the first half of this month, to 4.5% y/y, seals the deal on another 50bp cut in the Selic rate (to 11.25%) at next week’s central …
26th January 2024
Inflation jumps, February cut in balance The jump in Mexico’s inflation to a higher-than-expected 4.9% y/y in the first half of January was entirely due to a particularly sharp rise in agricultural goods inflation. But it probably means the chances of …
24th January 2024
This page has been updated with additional analysis since first publication . The renewed fall in Brazil’s headline inflation rate in December, to 4.6% y/y, paves the way for another 50bp cut to the Selic rate (to 11.25%) at the central bank’s next …
11th January 2024
Sharper-than-expected rise in inflation leaves February rate cut in balance The larger-than-expected rise in Mexico’s headline inflation rate to 4.7% y/y in December was mainly due to higher non-core inflation but, even so, the odds of Banxico beginning …
9th January 2024
Rates on hold, February may be too soon for first rate cut Mexico’s central bank left interest rates unchanged at 11.25% again today and there was no further tilt away from the hawkish bias in the accompanying statement. The likelihood that Banxico will …
14th December 2023
Copom sticking to 50bp cuts The statement accompanying the Brazilian central bank’s decision to lower the Selic rate by 50bp, to 11.75%, was slightly more dovish than the last one from November. But not enough has changed to make policymakers consider …
13th December 2023
This page has been updated with additional analysis since first publication . Another 50bp rate cut on the cards tomorrow The small fall in Brazil’s headline inflation rate in November, to 4.7% y/y, makes another 50bp interest rate cut (to 11.75%) at …
12th December 2023
Stubborn services inflation means Banxico to tread slowly with cuts Although Mexico’s headline inflation rate was weaker than expected last month (at 4.3% y/y), uncomfortably strong services inflation supports our view that Banxico’s easing cycle (likely …
7th December 2023
This page has been updated with additional analysis since first publication . Entering a period of softer growth Brazil’s economy fared better than expected in Q3, expanding by 0.1% q/q, but the bigger picture is that the strong growth seen in the first …
5th December 2023
This page has been updated with additional analysis since first publication . Further signs that Brazil’s recent outperformance has ended The meagre 0.1% m/m expansion in Brazil’s industrial production in October adds to the signs that, after a very …
1st December 2023
This page has been updated with additional analysis since first publication . Fall in headline inflation keeps another 50bp cut on the cards The decline in inflation in Brazil to 4.8% y/y in the middle of November means that – barring a major surprise in …
28th November 2023
This page has been updated with additional analysis since first publication . High services inflation will stop Banxico from cutting for now Mexico’s mid-month inflation reading of 4.3% y/y in November provides signs that the disinflation process is …
23rd November 2023
This page has been updated with additional analysis since first publication . Economic recovery now underway The 0.3% q/q expansion in Chile’s GDP in Q3 suggests that the recovery is beginning to take hold. We continue to expect above-consensus GDP …
20th November 2023
This page has been updated with additional analysis since first publication . Struggling for momentum The softer-than-expected 0.2% q/q rise in Colombian GDP in Q3, coming alongside signs that the economy was weakening towards the end of the quarter, …
15th November 2023
The fall in Brazilian inflation to 4.8% y/y in October confirms that the mini inflation cycle has now topped out. Inflation will continue to fall in the coming months, paving the way for further interest rate cuts. That said, we expect inflation to remain …
10th November 2023
Banxico remains hawkish, but may be starting to contemplate cuts Mexico’s central bank sprung no surprises and left its policy rate at 11.25% at today’s Board meeting and the accompanying statement retained its hawkish bias. That said, there was a very …
9th November 2023
Higher services inflation to keep Banxico in hawkish mood Mexico’s headline inflation rate dropped to a 32-month low of 4.3% y/y in October, but the fresh rise in services inflation will alarm officials at Banxico. We doubt this will prompt a restart to …
Another solid quarter, but slowdown awaits Mexico’s economy posted solid growth of 0.9% q/q in Q3, but we still think a slowdown is on the cards over the coming quarters as tight monetary policy takes a heavier toll and weaker growth in the US weighs on …
31st October 2023
This page has been updated with additional analysis since first publication . Copom on course for another 50bp cut next week The Brazilian mid-month inflation figure for October, of 5.0% y/y, confirms that the recent rise in inflation has now passed its …
26th October 2023
This page has been updated with additional analysis since first publication . Pick-up in services inflation to keep Banxico in hawkish mood The fall in Mexico’s headline inflation rate to a 31-month low of 4.3% y/y in the first half of October masked a …
24th October 2023
Construction boom helps to offset manufacturing weakness Mexico’s industrial sector posted a modest 0.3% m/m rise in output in August as another jump in construction output more than offset renewed weakness in manufacturing. But more timely indicators …
12th October 2023
This page has been updated with additional analysis since first publication . Services inflation remains stubbornly strong The further rise in Brazilian inflation to 5.2% y/y probably marks the peak in this mini-inflation cycle and the headline rate …
11th October 2023
Fresh rise in services inflation to harden Banxico’s hawkish stance Mexico’s headline inflation rate continued to edge lower, to 4.5% y/y, in September on the back of softer core price pressures. Even so, the fresh rise in services inflation will …
9th October 2023
This page has been updated with additional analysis since first publication . Industry stumbled in Q3 The 0.4% m/m rise in Brazilian industrial production in August failed to fully offset the decline in July and suggests that the sector was as a drag on …
3rd October 2023
Banxico turns up its hawkish rhetoric Mexico’s central bank, as widely expected, left its policy rate unchanged at 11.25% at today’s Board meeting and the accompanying statement remained very hawkish. We think Banxico will be the last major central bank …
28th September 2023
This page has been updated with additional analysis since first publication . Inflation data and minutes pour cold water on hopes for larger rate cuts The jump in Brazilian inflation to 5.0% y/y in the first half of September, taken together with the more …
26th September 2023
Inflation falls, but Banxico in no rush to cut Mexico’s headline inflation rate came in a little weaker than expected at 4.4% y/y in the first half of September while services inflation remained elevated. Coming alongside strong wage growth and the …
22nd September 2023
BCB not opening the door to larger cuts The Brazilian central bank’s (BCB’s) 50bp cut in the Selic rate (to 12.75%) and accompanying statement are likely to dash hopes that policymakers will up the pace of the easing cycle, at least in the short term. The …
20th September 2023
This page has been updated with additional analysis since first publication Another 50bp cut on the cards despite rise in inflation The rise in Brazilian inflation to 4.6% y/y in August won’t prevent the central bank from delivering another 50bp cut, to …
12th September 2023
Industry continuing to hold up well, for now Mexico’s industrial sector posted a slightly larger-than-expected 0.5% m/m increase in output in July and the survey evidence suggests that activity continued to hold up well in August. But we still think that …
11th September 2023
Inflation falls again, but Banxico to stay focussed on sticky services inflation Mexico’s headline inflation rate edged down again in August, to 4.6% y/y, on the back of softer core price pressures but, with services inflation still proving stubborn, …
7th September 2023
This page has been updated with additional analysis since first publication. Industry set to drag on growth in Q3 The larger-than-expected 0.6% m/m decline in Brazilian industrial production in July, taken together with weakness in some of the surveys for …
5th September 2023
This page has been updated with additional analysis since first publication . A strong H1, but slower growth ahead The much faster-than-expected Brazilian Q2 GDP growth figure of 0.9% q/q suggests that the economy is in stronger health than many – …
1st September 2023
This page has been updated with additional analysis since first publication . Inflation rise likely to take larger rate cuts off the table The jump in Brazilian inflation to a higher-than-expected 4.2% y/y in the middle of the month (and the prospect of …
25th August 2023
This page has been updated with additional analysis since first publication. Sticky services inflation to keep Banxico on the sidelines for now Mexico’s headline inflation rate declined further in the first half of August, but sticky services inflation …
24th August 2023
This page has been updated with additional analysis since first publication . Fall in GDP will sustain central bank’s dovish turn Chile’s GDP contracted by a shallower-than-expected 0.3% q/q in Q2, but the fall in output alongside downwards revisions to …
18th August 2023
Entering a period of weakness The larger-than-expected 1.0% q/q contraction in Colombia’s GDP in Q2 is likely to be followed by further weakness over the coming quarters. We expect this to prompt BanRep to join other central banks in the region in …
15th August 2023
PASO election tips economy deeper into crisis The news just out that Argentina has devalued the peso by around 20% against the dollar (to 350/$) and hiked the policy interest rate by 21%-pts to 118% underscores that the economy is lurching towards an even …
14th August 2023