LATAM WEEKAHEAD-Brazil to cut rates, Colombia to stay on hold

Sun Jul 19, 2009 12:56pm EDT
By Walter Brandimarte
NEW YORK, July 19 (Reuters) - Brazil will likely close Latin America's current monetary easing cycle this week, delivering the last interest rate cut in the region on Wednesday.
The Brazilian central bank's monetary policy committee, or Copom, is expected to cut the Selic base rate by a final half a percentage point to an all-time low of 8.75 percent, and leave it on hold for several months until the economy feels the full impact of the monetary easing.
"Given clearer signs of economic recovery and still somewhat high consumer inflation readings over the past few months, we believe the Copom will cut the Selic rate by a final 50 basis points, ending the easing cycle," Barclays Capital's analysts wrote in a research note.
The Colombian central bank will also hold a monetary policy meeting on Friday, but analysts expect it to keep rates unchanged at 4.5 percent.
The following are some key data points investors will be watching this week:
Wednesday July 22:
* Mexico - June unemployment rate. Economists expect the rate to rise to 5.5 percent from 5.31 percent in the previous period according to a Reuters survey.
Thursday July 23:
* Brazil - June unemployment rate: Barclays Capital expects the rate to remain unchanged at 8.8 percent.
* Mexico - CPI for 1st half of July: consumer inflation is expected to remain stable at 0.15 percent in the period, but core inflation will likely accelerate to 0.19 percent from 0.13 percent in the previous period, according to a Reuters survey.
Friday July 24:
* Brazil - IPCA-15: Barclays Capital sees Brazil's mid-month consumer price index declining to 0.35 percent from 0.38 percent in the previous period.
"Despite widespread cooling of inflation pressures, higher electricity and fuel prices should keep the headline figure at a somewhat elevated level," the bank said. (Editing by Diane Craft)