LATAM WEEKAHEAD-Brazil and Chile seen cutting key interest rates

Sun Mar 8, 2009 12:29pm EDT
NEW YORK, March 8 (Reuters) - Brazil and Chile are expected to cut their respective benchmark interest rates when their central banks meet next week in an attempt to support economic growth.
In Brazil's case, 25 out of 30 economists polled by Reuters expect the central bank to cut rates by 100 basis points to 11.25 percent.
"While inflation remains stubbornly high, we think the focus of policy-makers is firmly on avoiding a deep downturn," Win Thin, senior currency strategist at Brown Brothers Harriman wrote.
The firm, however, is in the minority camp, believing Brazil's main Selic rate will be cut by 150 basis points.
Chile is also expected to cut interest rates when it meets on Thursday due to a benign inflation outlook. In February, the bank took the aggressive step of lowering rates by 250 basis points to 4.75 percent, citing the severity of the global economic slump.
"We expect another bold cut in response to surprisingly benign inflation in the context of ongoing weakness," Barclays Capital wrote.
UPCOMING DATA
The following are some of the key data points investors will be watching in the coming week:
- Mexico's February consumer inflation on Monday: economists polled by Reuters expect consumer prices to rise 0.21 percent in average from a month earlier. [ID:nN05334241]
- Chile's February trade surplus on Monday: the trade surplus is seen plunging in February, as the global financial crisis reduces demand for its No. 1 export, copper. The surplus likely fell 68 percent in February to $418 million from $1.316 billion during the same month a year ago, according to the latest Reuters poll. [ID:nN06375920]
- Brazil's fourth-quarter gross domestic product on Tuesday: economists polled by Reuters expect a contraction of 2.3 percent from the third quarter and of 1.8 percent from the same quarter of 2007. [ID:nSPG000222]
- Brazil's February IPCA consumer price index on Wednesday: inflation is expected to show a rise due to seasonal factors such as food prices and tuition. Forecasts from Barclays see a 0.54 percent rise while Morgan Stanley sees a 0.55 percent increase.
- Peru's January GDP on Friday: despite growing at a faster pace than other Latin American markets, economists expect Peru's year-on-year GDP growth to slow to less than 4 percent, from 4.9 percent in December.
For a complete schedule of upcoming economic indicators in Latin America, see ECONLATAM. (Reporting by Daniel Bases and Walter Brandimarte in New York; Simon Gardner in Santiago, Vanessa Stelzer and Elzio Barreto in Sao Paulo; Editing by Leslie Adler, Bernard Orr)