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Inflation edges down, rate cut likely The modest decline in Brazilian inflation, to 4.0% y/y, probably gives Copom leeway to lower the Selic rate by 25bp when it meets next week, despite the fall in the real. The outturn was down from 4.2% y/y in January, …
11th March 2020
Inflation jumps, but policymakers will be watching peso Given rising inflation and the sharp fall in the peso, we no longer think that the Bank of Mexico will cut its key rate this month in line with the Fed. Policymakers will probably leave rates on …
9th March 2020
Headwinds growing Brazil’s relatively strong 0.5% q/q GDP growth rate recorded in Q4 masked a sharp loss of momentum late in the quarter. Taken together with growing headwinds from the effects of the coronavirus more recently, we think the central bank …
4th March 2020
Inflation picks up, easing cycle will end sooner than most expect Stronger headline inflation in early February was mostly due to food prices; core inflation remained stable. Even so, we think that the persistence of above-target inflation will limit …
24th February 2020
Growth to recover as policy is loosened We think that the slowdown in Peruvian GDP growth from 3.2% y/y in Q3 to 1.8% y/y in Q4 will be temporary and expect that the economy will recover more quickly than most expect this year. The headline Q4 GDP figure …
21st February 2020
Inflation edges down, policy to stay loose The modest fall in Brazilian inflation in the middle of the month, to 4.2% y/y, confirmed that it has passed its peak. The headline rate is likely to edge down further over the course of the year, allowing the …
20th February 2020
Growth to slow further from here Colombian GDP growth ticked down to 3.4% y/y in Q4 from 3.5% y/y in Q3 and we think that growth will slow further this year. The consensus expectations for growth look too optimistic. The Q4 outturn was stronger than our …
14th February 2020
Grim end to a weak year Mexico’s industrial sectors weakened again in December, capping a poor year and creating a weak starting point for 2020. The available surveys suggest that conditions remained difficult more recently. Figures released today showed …
11th February 2020
Inflation up in Mexico, down in Brazil The rise in Mexican inflation from 2.8% y/y in December to 3.2% y/y in January supports our view that, while the central bank will cut interest rates further, the easing cycle won’t go as far as markets are pricing …
7th February 2020
Industry stumbling in Q4 The larger-than-expected 0.7% m/m fall in Brazilian industrial production in December provides further evidence that the economic recovery was stumbling at the end of last year. This reinforces our view that Copom will opt for a …
4th February 2020
Inflation ticking up The above-target Brazilian inflation reading for the middle of January reduces the chance of an interest rate cut next month. Mexican inflation also rose, supporting our expectation of a short easing cycle. Brazil’s mid-month …
23rd January 2020
Brazil’s inflation jump takes further easing off the table Strong Brazilian inflation – which jumped to 4.3% y/y last month – and signs that the economy is on a firmer footing, suggest that the further interest rate cuts some still expect in early 2020 …
10th January 2020
Inflation eases, industrial production slips Mexican inflation eased again in December, supporting our view that policymakers will continue to cut rates this year. Elsewhere, the larger-than-expected 1.2% m/m fall in Brazilian industrial production in …
9th January 2020
Spike in inflation will be temporary, rate cuts likely by end year The rise in Chilean inflation to 3.0% y/y in December is likely to be followed by a further increase to around 4.0% y/y over the first half of this year. That said, this period of …
8th January 2020
Inflation soft but limited rate cuts ahead The fall in Mexican inflation to 2.6% y/y in the first two weeks of December, from 3.0% in the full month of November, will pave the way for Banxico to continue its easing cycle in the coming months. That said, …
23rd December 2019
Inflation jump takes further easing off the table The sharp rise in Brazilian inflation, to 3.9% y/y in the first half of December, from 2.7% a month earlier rules out another interest rate cut at the next central bank meeting in February. The mid-month …
20th December 2019
Manufacturing headwinds strengthen The fall in Mexican manufacturing output in October was largely due to the GM strike, but even if this were excluded the latest figures show weakness across key industrial sectors. This strengthens our belief that the …
12th December 2019
Inflation stable, opening way for 25bp cut next week Mexican inflation remained at a three-year low of 3.0% y/y in November, which strengthens our view that policymakers will cut their key rate from 7.50% to 7.25% next week. Full-month figures released …
9th December 2019
Inflation rises, but 50bp rate cut still on the cards The slightly larger-than-expected rise in Brazilian inflation in November, to 3.3% y/y, was driven partly by food inflation, but also by a rise in regulated prices. The data are unlikely to prevent …
6th December 2019
Inflation set for a temporary spike, rate cuts still to come next year The rise in Chilean inflation to 2.7% y/y in November is likely to be followed by a further increase to around 4.0% y/y early next year. That said, this increase will be temporary. As …
A good start to Q4 The 0.8% m/m rise in Brazilian industrial production in October provides early evidence that GDP growth in Q4 is shaping up to be a bit stronger than Q3’s 0.6% q/q. The industrial production figure was a touch weaker the Bloomberg …
4th December 2019
A slow recovery The slightly better-than-expected Brazilian Q3 GDP growth figure of 0.6% q/q adds to the evidence that the recovery is gaining some momentum. But growth remains soft, and the central bank is still almost certain to lower the Selic rate by …
3rd December 2019
Slight pickup, but policymakers will still cut in December Inflation ticked up in the first half of November in both Brazil and Mexico, but we doubt that this will be enough to dissuade policymakers from cutting their key interest rates in December. We …
22nd November 2019
Recovery to continue as policy is loosened The pick-up in Peruvian GDP growth from 1.2% y/y in Q2 to 3.0% y/y in Q3 probably marks the beginning of a sustained economic recovery. While GDP growth over this year as a whole is likely to be just 2.5%, we …
21st November 2019
Manufacturing headwinds will grow Mexican industrial production stagnated in September, and problems in the auto sector probably caused conditions to deteriorate further in October. This adds to the pressure for policymakers to cut their key rate in …
11th November 2019
Lower inflation keeps door open to easing The fall in Brazilian inflation to 2.5% in October, one of the lowest rates on record, makes another 50bp cut in the Selic rate at December’s Copom meeting almost certain. That said, policymakers have given a …
7th November 2019
A bumpy recovery The weaker-than-expected 0.3% m/m rise in Brazilian industrial production in September serves as a reminder that, while the economy is now strengthening, it will be a weak and bumpy recovery. The outturn was in line with our forecast but …
1st November 2019
Weak recovery to spur further rate cuts The meagre 0.1% q/q rise in Mexican GDP in Q3 makes another interest rate cut at the next central bank meeting in November almost certain. The data release increases the likelihood of a larger 50bp cut. The 0.1% q/q …
30th October 2019
Inflation remains soft, rate cuts ahead Mexican inflation remained at 3.0% y/y October, which supports our view that policymakers will cut their key rate from 7.75% to 7.25% by the end of this year. Figures released today showed that Mexican inflation …
24th October 2019
50bp cut almost certain now The fall in Brazilian inflation to 2.7% y/y in the middle of October, one of its lowest rates on record, means policymakers will (barring any hiccups in the final vote on pension reform later today) almost certainly cut the …
22nd October 2019
Manufacturing weakness is here to stay Mexican industrial production rose by a surprisingly brisk 0.8% m/m in August, but with the key manufacturing sector facing a slowdown, we expect that conditions for industry as a whole will remain weak later this …
11th October 2019
Inflation surprise puts another 50bp cut on the table The fall in Brazilian inflation to a weaker-than-expected 2.9% y/y last month opens the door to another 50bp cut in the Selic rate when Copom meets at the end of this month. The outturn for September …
9th October 2019
Weak inflation adds to case for November rate cut Mexican inflation eased to a three-year low of 3.0% y/y in September, which strengthens our view that policymakers will cut their key rate from 7.75% to 7.25% by the end of the year. Full-month figures …
Further signs of recovery The better-than-expected 0.8% m/m rise in Brazilian industrial production was driven by rapid growth in the mining sector, which won’t be sustained. Even so, the figures add to the evidence that the economic recovery gathered …
1st October 2019
Inflation below target, and set to remain low The Brazilian mid-month inflation figure of 3.2% y/y in September leaves the door open to further monetary easing over the coming months. Beyond that, the large output is likely to keep inflation below target …
24th September 2019
Softer inflation adds to argument for another cut Mexican inflation eased very slightly over the first half of September, supporting our view that policymakers at the central bank will cut their key rate from 8.00% to 7.75% on Thursday. Figures released …
Industry remains in the doldrums The 0.4% m/m fall in Mexican industrial production in July adds to our view that economic activity remains subdued and Banxico will cut interest rates later this month. The decline in industrial production in July was …
11th September 2019
Falling inflation seals the deal for September rate cut The sharp drop in Mexican inflation from 3.8% y/y in July to 3.2% y/y in August is likely to be followed by further falls over the rest of the year. That should pave the way for more monetary easing …
9th September 2019
Low inflation opens door for further rate cuts The small rise in Brazilian inflation (to 3.4%y/y in August) is unlikely to trouble policymakers at the central bank. With the headline rate below target and the economy struggling, we expect a 50bp cut in …
6th September 2019
A bad start to Q3 The surprising 0.3% m/m drop in Brazilian industrial production in July probably seals the deal on a 50bp interest rate cut at the next central bank meeting on 18 th September. July’s outturn was not as bad as the 0.7% m/m contraction …
3rd September 2019
Investment supported Q2 recovery The surprisingly strong 0.4% q/q rise in Brazilian GDP in Q2 confirms that the extremely weak activity recorded earlier this year was a blip rather than the start of a renewed downturn. But the economy is still soft and …
29th August 2019
Soft inflation increases likelihood of 50bp cut The weaker-than-expected Brazilian inflation figure, of 3.2% y/y, raises the likelihood that Copom will cut the Selic rate by 50bp (rather than 25bp) when it next meets on 18 th September. The mid-month …
22nd August 2019
Chunky fall in inflation to give Banxico room for another rate cut The larger-than-expected fall in Mexican inflation in the first half of this month, to 3.3% y/y, strengthens the case for Banxico to follow up this month’s 25bp interest rate cut with …
Recovery to continue as policy is loosened The pick-up in Chilean GDP growth from 1.6% y/y in Q1 to 1.9% y/y in Q2, is likely to mark the beginning of a sustained economic recovery. While GDP growth over this year as a whole is likely to be just 2%, our …
19th August 2019
Growth likely to slow from here Colombian GDP growth remained strong in Q2 at 3.0% y/y, and we’ve revised up our forecast for 2019 from 2.0% to 2.8%. But we still think that the consensus forecasts are too optimistic. The Q2 outturn was stronger than our …
15th August 2019
Production rebound to provide strong carryover for Q3 The stronger-than-expected increase in Mexican industrial production in June, of 1.1% m/m, should provide a strong carryover for Q3. But with the economy still very weak, we remain comfortable with our …
9th August 2019
Falling inflation opens door to further rate cuts The decline in inflation in Brazil and Chile in July points to further monetary easing, and we currently expect a 25bp interest rate cut in both countries next month. In Brazil, with pension reform passing …
8th August 2019
Further fall in inflation keeps August rate cut in play The further fall in Mexican inflation in July, to 3.8% y/y, keeps an interest rate cut at next week’s policy meeting on the table. It will be a close call, but on balance we think the central bank …
Slipping into recession The 0.6% m/m fall in Brazilian industrial production in June adds to the evidence that GDP contracted again in the second quarter. We expect a recovery in the second half of the year, but it will be slow going. June’s outturn was …
1st August 2019
Mexico (maybe) dodged recession, but rate cut coming next month Preliminary GDP data suggesting that Mexico escaped a technical recession by the skin of its teeth in Q2 don’t change the bigger picture that the economy remains very weak. This supports our …
31st July 2019