Weekly agenda: Brazil rates; Colombia and Peru’s GDP; Argentina’s inflation

RIO DE JANEIRO, BRAZIL – The coming week will bring news in Latin America regarding the key interest rate in the region’s leading economy and key data in Argentina, Colombia, and Peru.

In Brazil, the Monetary Policy Committee could mark the end of its tightening cycle with a final rate hike on Wednesday. Attention would also be on seeing how the Brazilian Central Bank (BCB) assesses President Jair Bolsonaro’s recent push to cut fuel taxes.

The Brazilian Senate is expected to vote on a permanent cap on state taxes on fuel, electricity, and telecommunications services, which would mean a significant financial loss for regional governments.

If approved, the government could move forward with other initiatives, including its offer to reimburse states for additional cuts in their taxes on diesel and domestic gas.

In Argentina, May’s inflation data could trigger another rate hike. Economists Adriana Dupita and Felipe Hernandez of Bloomberg Economics highlighted that a 200 basis point increase to 51% is possible.

It would be an effort to comply with International Monetary Fund (IMF) targets -which will soon be adjusted- and to ensure public sector financing after a turbulent week in the bond market.

In Colombia, activity data will be released in April, which should reverse the month-on-month advances of the previous two months, in line with Dupita and Hernandez’s expectation that growth will slow down in the second quarter.

BRAZIL

April service sector results will be released on Tuesday, April 14, which is likely to have seen substantial expansion, driven by services in person.

Dupita and Hernandez’s forecast would increase the indicator’s three-month average up 1.5% from the previous three months and 9.4% from a year earlier.

But the most important data this week for the markets regarding the Brazilian economy will be known only on Wednesday, June 15, when the Monetary Policy Committee meets.

Dupita and Hernandez expect the BCB to raise the official interest rate by 50 basis points to 13.25% and signal that this is the last hike of this cycle.

“(The BCB’s) reasoning will be as important as the decision itself in shaping market expectations,” Dupita and Hernandez wrote.

ARGENTINA

Inflation data for May will be released on Tuesday, May 14. Another high monthly result will likely push the annual Consumer Price Index above 60%.

The Argentine Central Bank announced rate hikes following the index’s release in the last five months. Economists Dupita and Hernandez noted that this might happen again.

COLOMBIA

On Wednesday, June 15, the retail sales report for April and the industrial production index will be published.

On Friday, June 17, Colombia will release its April economic activity data, likely to have risen 7.6% year-on-year, economists wrote. The result would be consistent with a small month-on-month decline after remaining virtually flat in March.

On the same day, the Colombian trade balance for April will be published, which is likely to have posted a deficit of US$366 million, according to projections.

PERU

Peru’s economic activity index for April will be released on Wednesday, June 15. A 6% year-on-year increase is expected, consistent with partial recovery after monthly declines in March and February.

The activity would be above its pre-pandemic level but still below its potential.

The Central Reserve Bank of Peru’s Monetary Policy Report will be published on Friday, June 17.

With information from Bloomberg