| NEW YORK, April 5
NEW YORK, April 5 Central banks in Peru and
Chile are expected to cut benchmark interest rates in the
coming week in an effort to spur growth, mindful that inflation
data also due is likely to show further slowdown.
"Next week, we expect inflation to continue to drop
year-on-year in Brazil, Mexico and Chile, even though in all
cases we forecast slightly above consensus month-on-month
prints," Barclays Capital wrote to clients on Friday.
Barclays said it expected Peru, on Wednesday, to cut
interest rates by 50 basis points to 5.5 percent.
"Lower GDP growth and tame inflation in March suggest
faster easing," the firm said, warning that there is a risk of
a larger cut in Peru's rate.
Chile's central bank is expected to continue with interest
rate cuts on Thursday. The benchmark rate stands at 2.25
"Although March's inflation is still unknown, and the
unemployment rate was in line with our expectations, we note
that activity data for February was weaker than expected. We
therefore now believe the central bank will cut 50 basis points
on April 9 (55 percent probability)," Citigroup said in a
research note to clients on Friday.
"However, a strong inflation surprise could turn the
balance to 25 basis points again, in our view," the company
But ahead of that expected interest rate cut, Chile reports
its Imacec economic activity index on Monday. It is expected to
show a drop of 3.5 percent, year-on-year, in February, the
latest Reuters poll shows. For details, see [ID:nN02260103]
"Preliminary data point to weak February," Morgan Stanley
said in a research note on Friday. The firm is predicting a 3.0
Holidays on Thursday and Friday across the region will
likely front-load the impact of the data early in the week and
postpone the reaction to the central bank decisions in Chile
The following are some of the key data points investors
will be watching this week. All forecasts are compiled by
Thomson Reuters unless noted differently:
Tuesday, April 7:
- Chile trade balance for March. Barclays forecasts $450
million; Citigroup forecasts $520 million; Morgan Stanley
forecasts $475 million.
- Chile March CPI - Barclays forecasts a rise of 0.6
percent month-on-month; Citigroup forecasts a rise of 0.3
percent, driven by higher clothing and education service
prices; Morgan Stanley forecasts a rise of 0.5 percent.
- Mexico CPI for March. Barclays forecasts a rise of 0.55
percent, bringing the year-on-year reading of 6.0 percent from
6.2 percent; Citigroup forecasts a rise of 0.57 percent,
bringing its year-on-year reading to 6.04 percent; Morgan
Stanley forecasts a March reading of 0.48 percent bringing the
annual headline inflation "below 6 percent for the first time
Wednesday, April 8:
- Brazil IPCA inflation report for March. Barclays
forecasts a rise of 0.30 percent; Citigroup forecasts a rise of
0.25 percent; and Morgan Stanley forecasts a rise of 0.15