LatAm Central Banks
View:
August 14, 2024
EM Markets Divergence with China Harder Landing Concerns
August 14, 2024 3:35 PM UTC
Global market turbulence has had a spillover impact into EM, but also some EM assets have benefitted from rotation away from the U.S. What are the prospects in the coming months?
We see scope for a 2nd wave of U.S. equity and Japanese Yen (JPY) correction, which are a mixed influence for EM assets
August 06, 2024
BCB Minutes: Hawkish and Consideration over Hikes
August 6, 2024 2:55 PM UTC
The Brazilian Central Bank kept the policy rate at 10.5%, emphasizing a hawkish stance amidst global uncertainties and risk aversion. Inflation is projected at 3.2%, above the 3% target. The board remains cautious, with potential rate hikes if the economic situation worsens. A rate cut may be possib
August 01, 2024
BCB Review: A Hawkish Tweak
August 1, 2024 1:45 PM UTC
The Brazilian Central Bank (BCB) kept the policy rate unchanged at 10.5%, with a hawkish tone highlighting risks. Strong domestic growth and employment data persist despite monetary tightening. Inflation expectations for 2024 and 2025 are at 4.1% and 4.0%, respectively, above the 3.0% target. Fiscal
July 01, 2024
EM After the Elections: Fiscal Focus and Inflation Questions
July 1, 2024 8:05 AM UTC
Enhancing fiscal credibility is key post-election in India and S Africa, but also for Brazil. India, will do this in the 3 week of July, but S Africa needs to move from ANC/DA led coalition optimism to reality quickly. Brazil needs to stop the vicious circle of sentiment building up on fiscal slip
June 27, 2024
Brazil: Adoption of Continuous Targeting Means Not Much Change
June 27, 2024 1:28 PM UTC
The Brazilian government has revised the BCB's inflation targeting framework, effective January 2025, to a continuous target system. If inflation exceeds the target bands for six consecutive months, the BCB must explain the discrepancy. The 3.0% target with 1.5% bands remains unchanged, alleviating
June 26, 2024
BCB Minutes: Deterioration of the Scenario Requires Higher Rates
June 26, 2024 1:32 PM UTC
The Brazilian Central Bank maintained the SELIC rate at 10.5%, emphasizing a unanimous, hawkish stance on inflation. Markets question BCB's inflation control with upcoming leadership changes. External uncertainties, domestic consumption surprises, and rising inflation expectations were highlighted.
June 25, 2024
EMFX Outlook: USD Strength to Ebb with Different EM Impact
June 25, 2024 8:05 AM UTC
We see Fed rate cuts from September starting to soften USD strength into year end and 2025. Beneficiaries will include currencies with inflation moving towards target and high real rates or, alternatively, undervalued currencies. This should benefit the Brazilian Real (BRL) and Indonesian Rupiah
June 19, 2024
BCB Review: A Pause in the Cutting Cycle
June 19, 2024 10:17 PM UTC
The Brazilian Central Bank kept the policy rate at 10.5%, citing economic uncertainty and a need for caution. Inflation expectations for 2025 are 3.8%, above the 3.0% target. Political interference concerns persist, but the unanimous decision indicates a technical approach. The BRL's depreciation ma
June 17, 2024
BCB Preview: A Pause Amid the Risks
June 17, 2024 2:34 PM UTC
The Brazilian Central Bank (BCB) is expected to maintain the SELIC rate at 10.5% amid external sector volatility, stubborn service inflation, and deteriorating inflation expectations. A hawkish majority on the board suggests a pause despite potential for cuts. Risks include rising food prices post-f
May 14, 2024
BCB Minutes: Worsening Conditions Demand Caution
May 14, 2024 2:35 PM UTC
The Brazilian Central Bank's latest meeting revealed a shift in forward-guidance, reducing the cut from 50bps to 25bps. While no immediate actions were taken, the minutes highlighted worsening conditions in three key areas: External Environment, Fiscal, and Economic Activity. Despite split votes on
May 09, 2024
BCB Review: 25bps Cut, No Additional Guidance
May 9, 2024 1:11 PM UTC
The Brazilian Central Bank convened, opting against a 50bps cut, reducing it to 25bps, lowering the policy rate to 10.5%. A split vote ensued, with 25bps winning 5x4. The communique, vague possibly due to board division, noted labor market and economic activity surpassing expectations. Foreign marke
May 06, 2024
BCB Preview: 25bps or 50bps cut?
May 6, 2024 1:02 PM UTC
The Brazilian Central Bank (BCB) convenes on May 8 to set the policy rate. Previous forward guidance hinted at a 50bps cut in May, but recent statements from BCB President Roberto and some weakness in the BRL have shifted expectations to a 25bps cut. However, we anticipate the BCB maintaining a 50bp
May 03, 2024
EMFX: Diverging On Domestic Forces Not Less Fed Easing Hopes
May 3, 2024 10:45 AM UTC
While U.S. economic developments, plus Fed policy prospects, will be important in terms of EM currency developments, domestic politics and fundamentals will also be decisive. These can keep the South Africa Rand volatile in the remainder of 2024, given the risk of a coalition government and African
March 26, 2024
BCB Minutes: Doors Opens to Diminish the Cuts Pace in June
March 26, 2024 1:11 PM UTC
The Brazilian Central Bank has released the minutes of their last minutes. The minutes highlighted the uncertainty, labour market pressures and unanchored expectations. They decided to reduce the horizon of the 50bps ace to the May meeting which indicates a prospective reduction to diminish the pace
EM FX Outlook: Domestic Drivers Key
March 26, 2024 9:01 AM UTC
In terms of spot EM FX projections domestic drivers remain critical, with a desire to avoid appreciation versus the USD for some countries. Fed easing in H2 2024 should however help EMFX more broadly and allow some recovery in spot rates (e.g. Indonesian Rupiah (IDR), South African Rand (ZAR)
March 21, 2024
BCB Review: Forward Guidance Kept but Chance to be Taken Out Soon
March 21, 2024 12:50 PM UTC
The Central Bank (BCB) slashed the policy rate by 50bps to 10.75%, with further cuts anticipated. Medium-term easing hinges on inflation dynamics and economic factors. The BCB's forward guidance suggests a potential shift in communication and cut magnitude by June, changing the cut pace to 25bps fro
March 18, 2024
BCB Preview: 50bps Cut and Softer Forward Guidance
March 18, 2024 4:48 PM UTC
The Brazilian Central Bank is anticipated to cut the policy rate by 50bps, reaching 10.75%, amidst easing inflation and cautious market sentiment. The recent surge in food prices raises concerns, while the BCB is expected to abandon its usual forward guidance in favor of more data-driven decisions.
February 22, 2024
EMFX: Carry and Domestic Fundamentals Rather Than the USD
February 22, 2024 10:00 AM UTC
Bottom Line: Most major EMFX currencies have performed better than the Euro or the Japanese Yen against the USD in 2024 (Figure 1). This is due to carry trades in Latam, but elsewhere reflects global equity love on Indian equities or domestic fundamentals. This resilience for Brazilian Real/Indi
February 06, 2024
BCB Minutes: Caution within the Easing Cycle
February 6, 2024 1:22 PM UTC
The BCB released minutes detailing the 50bps cut to SELIC, shedding light on monitored risks. Despite a unanimous vote, differences in language emerged, especially regarding variables. Notably, new government-appointed members were present. Internationally, the board noted minimal impact from Fed de
February 01, 2024
BCB Review: 50Bps Cut Maintained
February 1, 2024 2:36 PM UTC
The Brazilian Central Bank (BCB) maintained a widely expected 50bps cut in the policy rate, bringing it down to 11.25% from 11.75%. The BCB's neutral communique highlighted caution in emerging economies amid global monetary tightening. The domestic scenario, aligned with contractionary policies, saw
January 29, 2024
BCB Preview: 50 bps Cut to Be Kept but Caution in the Communique
January 29, 2024 8:51 PM UTC
The Brazilian Central Bank is expected to continue cutting interest rates on January 31, aiming to address the overly contractionary policy rate of 11.75%. In the face of persistent inflation around 4%-5%, concerns include El Niño's impact on food prices and uncertainties in services inflation. Fis
January 26, 2024
Climate Change: 2025-30 Rather than Long-Term Impacts
January 26, 2024 4:15 PM UTC
Bottom Line: In the 2half of the 2020’s GDP in DM economies will benefit from climate change investment, though the net positive impact will likely be modest on an annual basis. The impact on EM economies will be more mixed, as lack of fiscal space restrains the scale of green investment and some
January 09, 2024
Shipping Freight Cost Jump and Inflation – Some Perspectives
January 9, 2024 2:24 PM UTC
Figure 1: Freight Cost Surge in Perspective
Source: DataStream
How Long?
Houthi rebels have been attacking some ships in the Red Sea in recent weeks. The key question is how long this will last? One line of thinking is that the Houthi attacks are part of Iran axis of resistance alongside attacks
January 03, 2024
AI and Technology Impact on Growth and Inflation
January 3, 2024 10:30 AM UTC
Bottom Line: The full benefits of the latest AI wave will likely not kick in until the late 2020/early 2030’s.However, 5G over the last couple of years has been enabling more connectivity via the Internet of Things and allowing more big data analysis, including AI tools and algorithms. In the 2hal
November 16, 2023
Long-term Forecasts to download in Excel
November 16, 2023 10:38 AM UTC
We present our annual forecasts that go out to 2030 for GDP Growth, Inflation, and Monetary Policy and to 2028 for Exchange Rates. The file contains five sheets: a Country Coverage summary page and a sheet for each of the four indicators.
The forecasts are consistent with the Long-term Forecasts: DM
Long-term Forecasts: DM Policy Easing
November 16, 2023 8:44 AM UTC
The Continuum Economics research team has spent much of the last month researching, reviewing and debating our long-term GDP, CPI inflation and central bank policy rate forecasts for 2025-30. Alongside a reassessment of long-term factors such as productivity and demographics, we have examined the la
November 01, 2023
AI and Technology Impact on Growth and Inflation
November 1, 2023 10:01 AM UTC
The huge buzz around artificial intelligence has also raised a debate about the growth, jobs and inflation impact of this latest phase of the 4th industrial revolution (5G, AI, Internet of Things and Big Data)? What is the likely medium-term impact?
Figure 1: Survey of Impact on Global GDP Per Annu
October 16, 2023
Climate Change: 2025-30 Rather than Long-Term Impacts
October 16, 2023 2:15 PM UTC
Climate economists and policymakers traditionally think about climate change issues out to 2050, but what are the macroeconomic impacts out to 2025-30 from investment plans and also the climate events that are already happening?
Figure 1: Implications of Net Zero Policy Packages on Debt, Relative to
September 19, 2023
Systemically Important Banks After Credit Suisse
September 19, 2023 6:42 AM UTC
The spring U.S. regional banking crisis and Credit Sussie saga have prompted stress tests and reviews from regulators around the world with no sustained crisis in the banking system. Will bank stability remain on the backburner as a macro and market issue?
Figure 1: Global Systemically Important Ba
