Looking forward, we expect the policy rate to reach 2.0% by yearend, with the next cut likely in September.
See our Week Ahead full note at the end of this report.
We expect stable rates at this meeting
Pessimism has reigned for consumers in 9 of the last 10 months.
Pessimism has reigned for consumers in 9 of the last 10 months.
Moderate disinflation will likely continue in July.
Both BCB and Itaú's monthly GDP indicators increased in May.
Consumer prices decelerated for the third consecutive month in June.
Both BCB and Itaú's monthly GDP increased in May.
Now, the second round of voting is very likely to take place only in August.
On Wednesday, the House concluded the first round of voting on the base text, with 379 votes in favor and 131 against the proposal.
See our Week Ahead full note at the end of this report.
Last night, the House concluded the first round of voting on the base text, with 379 votes in favor and 131 against the proposal.
The plenary started to analyze the highlights, and, possibly later this week, will move on to the second round of voting
The Lower House is currently analyzing the requirements and, once this step is completed, the plenary will be able to vote the main text.
According to local news, the Lower House is set to begin in the next hours the first round of voting on the pension reform.
Downbeat private sentiment amid an uncertain global scenario justify our 2.4% growth call for this year.
Given our outlook of a growth slowdown this year, we do not expect a notable acceleration of inflation.
See our Week Ahead full note at the end of this report.
The Lower House will probably start to analyze the proposal on Tuesday
It will be important to monitor how these steps will evolve, in order to gauge the timing of the first Lower House floor vote.
The committee is now voting on the amendments, which might be concluded today
After this result, our GDP tracking for 2Q19 increased slightly, to 0.3% qoq/sa (from 0.2% previously)
For 2019, we see GDP growth of 2.4%, down from 4% in 2018
Industrial production declined 0.2% mom/sa in May.
We forecast a 0.6% decline on seasonally adjusted terms.
The median of the Selic rate expectations declined to 5.50%, from 5.75%.
Seasonally adjusted, the unemployment rate slid 0.1 p.p. to 11.8%.
See our Week Ahead full note at the end of this report.
This result goes in line with the rebound also registered in the consumer, retail and construction confidence indicators in the period.
The 3-month moving average decreased to 13k, from 26k in the previous month.
The print is broadly in line with the preview released last week, in which industrial confidence fell 1.4 p.p.
The risks are still tilted to the downside, given ongoing adjustments and uncertainties regarding the outcome of the upcoming presidential election
Both retail and construction confidence indicators registered increases in June.
The minutes reinforce our call that the Copom will resume easing in July, conditional on concrete progress in the reform front.
This increase interrups a series of four consecutive drops
We expect economic activity to decelerate to 1.0% in 2019, from 2.0% in 2018.
We will learn more about the authorities´ views with the release of the meeting minutes at 08:00 AM on Tuesday, June 25
In our view, a widening output gap (we see growth at 2.6% this year) and controlled inflation would likely lead the central bank to cut rates
We believe that the Copom will maintain the Selic rate stable at 6.5% per year
The Copom decision to leave the base rate unchanged at 6.5% pa was widely anticipated.
The year-end Selic rate for 2019 declined 75 bps to 5.75%
We believe that the Copom will maintain the Selic rate stable at 6.5% per year.
According to the Focus survey, the median of Selic rate expectations declined 75 bps from its current level.
See our Week Ahead full note at the end of this report.
Considering the report, we estimate fiscal savings of BRL 930 bln in 10 years
Compared to the same month of 2018, the index declined 0.6%.
The rapporteur Samuel Moreira is expected to present the full report to the Lower House Special Committee today, at 9:30 AM
According to the rapporteur, the fiscal impact estimate of the proposal after the changes amounts to BRL 913 bn in the next ten years.
Broad retail sales remained stable (seasonally-adjusted) in April, weaker than market expectations and our forecast.
At the margin, industrial production improved, but momentum remained moderate.
The board’s working assumption going forward is for stable rates for the following quarters
At the margin, industrial production improved, but momentum remained moderate.
See our Week Ahead full note at the end of this report.
Elements justifying the largest rate cut in a decade include the activity outlook downgrade, higher potential growth and lower estimated neutral rate.
See our Week Ahead full note at the end of this report.
Weak public investment, associated to a transition effect between administrations, will probably affect construction investment in the short-term
Activity in the primary sector is expected to improve ahead but we see clear downside risks to our 3% growth outlook.
According to calendar adjusted figures, gross fixed investment fell sharply in March.
Our preliminary forecast for May’s industrial production is a 2% mom/sa decline
The monthly GDP proxy (Imacec) increased 2.1% yoy in April, in line with market consensus and a tick above our 1.9% call.
The 3-month moving average rate with seasonal adjustment declined 0.1%.
The increasingly complex external scenario is resulting in growing domestic uncertainty.
Retail sales (including vehicles) fell 0.8% over twelve months in the period, below the market consensus (-0.6%) and our forecast (-0.3%).
See our Week Ahead full note at the end of this report.
For 2Q19, our preliminary forecast is a modest GDP growth of 0.1% qoq/sa.
The national unemployment rate reached 12.5% in April.
We forecast a 0.2% qoq/sa decline, leading to 0.4% growth in year-over-year terms
GDP declined 0.2% qoq/sa in 1Q19.
Confidence across all sectors decreased in the month, which indicate no substantial acceleration in economic activity ahead
The NPL ratio remained unchanged at 4.7% for consumers and declined to 2.7% for businesses (from 2.8%).
Data released so far for 2Q19 indicate no substantial acceleration in economic activity ahead, after a disappointing 1Q19.
Data released so far for 2Q19 indicate no substantial acceleration in economic activity ahead, after a disappointing 1Q19.
The negative result was driven both by the expectation and current situation components.
Although all members agreed to maintain the rates stable at 3%, several stated that a neutral stance justified discussing all possibilities.
Using our seasonal adjustment, formal job creation increased to 50k in April.
Declines were observed in industrial, consumer and now retail confidence indicators.
The decline was driven by drops both in the expectations and current situation components.
Core CPI came in at 0.09% (from 0.13% a year ago), pressured by tradable prices, while core services decelerated.
Using calendar-adjusted data, retail sales grew at a slower pace in March.
Activity and confidence indicators in several countries from Latam will be published today, adding to the expenditure report in Brazil.
Activity data released so far for 2Q19 indicate no substantial acceleration in economic activity.
The breakdown shows a drop both in current conditions and expectations components.
Depressed private sentiment and a slowing global economy mean Chile’s growth risks are tilted to the downside.
Despite the negative print, part of the worsening of consumer confidence could be transitory.
The Board sees the recent high in inflation as transitory, and believes its policy stance is consistent with the convergence of inflation to its target.
The print was likely influenced by the weaker Colombian peso and protests that affected transportation routes and led to higher inflation.
The result marked the third consecutive monthly decline, leading the indicator to decrease 0.7% on a quarterly basis.
The Board recognizes the recent acceleration in inflation as transitory and see inflation converging toward its target with current rate levels.
According to BCB, the monthly GDP proxy index (IBC-Br) decreased 0.3% mom/sa in March.
Both our monthly GDP proxy (PM-Itaú) and service sector revenues (PMS) declined in March.
The committee indicates that, while 1Q19's GDP may well have a negative print, activity is likely to rebound after the pension reform.
The minutes suggest the Copom is still comfortable with the level of the Selic rate, but we expect the BCB to cut rates again in September.
Our LatAm Macro Monthly report was published today, featuring scenarios for Latam economies, the global scenario and commodities.
Despite some monthly upward pressure in the core services component, core inflation remains in comfortable levels.
Despite some monthly upward pressure in the core services component, core inflation remains in comfortable levels.
The print reinforces our view of weak GDP growth in 1Q19.
We’ll learn more about their thinking with the release of the minutes on Tuesday, May 14 at 08:00 AM.
For the time being, we anticipate seasonally-adjusted declines in both retail sales indicators in April
Uncertainty over the direction of domestic policy and the approval of the USMCA by the U.S. Congress will continue to weigh on investment in the short-term
We’ll learn more about their thinking with the release of the minutes on Tuesday, May 14 at 08:00 AM
We believe that the central bank will remain on hold throughout the year
Gross fixed investment came in above expectations in February.
Activity in the first quarter of 2019 grew at its slowest pace since 2Q17.
We expect the Copom to maintain the Selic rate at 6.50% in its next monetary policy meeting.
We expect the Copom to maintain the Selic rate at 6.50% in its next monetary policy meeting.
March's industrial production will also be released today.
Next week, Copom, inflation and activity data on focus.
The EMAE (official monthly GDP proxy) printed the third consecutive increase in February.
For April’s industrial production, our preliminary forecast points to a 0.9% mom/sa decline.
With these results, the week was marked by weak results in confidence indicators among broadly all sectors.
Despite the improvement, the indicators still reflect a slow-paced recovery of the labor market in the first quarter of the year.
Despite the increase, the level of industrial business confidence remains low, pointing to stagnation of industrial production going forward.
While still timid, the advance is better than the sideway movements registered in other sectors in the same period.
Additional widening in the CAD or tightening of financial conditions could change the mood in the board.
Confidence in the retail and construction sectors moved sideways in April.
The industrial prices component surprised to the upside
The poll surveyed 2000 participants between April 12th and 15th.
The poll surveyed 2000 participants between April 12th and 15th.
The proposal will now head to a Special Committee at the Lower House, yet to be created.
If the proposal is approved, it will then be evaluated by a Special Commission at the Lower House, yet to be created.
At the margin, activity lost momentum, expanding a mild 1.0% qoq/saar, below the 3.1% recorded in 4Q18.
If this trend of confidence indicators moving sideways continues, it will indicate a formal job creation (CAGED) of around 20k in April.
If this trend of confidence indicators moving sideways continues in other sectors, this will indicate a formal job creation (CAGED) of around 20k in April.
April’s IPCA-15 mid-month inflation will be released on Thursday. We expect a 0.69% increase in the period.
While the policy, in our view, will not have a material impact on the CPI, it signals the government’s concern in maintaining support for the October election.
Untamed inflation and the political cycle have led the government to adopt incomes policy.
The political cycle and uncertainty about the outcome of the presidential elections is a obstacle to disinflation.
Additionally, the government presented its budgetary guidelines law (LDO) proposal for 2020 to Congress, in line with our call.
Consumer prices rose 4.7% mom from February, above the 4.05% market consensus forecast.
Our LatAm Macro Monthly report was published on Friday, featuring scenarios for Brazil, LaTam, the global economy and commodities.
On a quarterly basis, the index decreased 0.2%.
Our GDP tracking for 1Q19 continues to point to a 0.1% qoq/sa decline.
We expect Banxico to deliver two 25-bp rate cuts in the last quarter of 2019.
We estimate a 2.6% and 0.4% mom/sa decrease in ABPO and ABCR in the period.
The minutes indicate that most board members are still worried with the inflation outlook.
Notwithstanding the elevated headline result for March, core inflation measures remain on a very comfortable path.
We forecast gains of 0.3% in core retail sales and 0.9% in broad retail sales for March.
Overall, the still-low inflation, looser policy stance by the Fed, and risks to global growth suggest there is no haste to remove stimulus in the near term.
February’s core retail sales remained flat, while the broad index receded in the period.
See our Week Ahead full note at the end of this report.
A moderation in downside inflationary pressures is in line with the view that low inflation is transitory
See our Week Ahead full note at the end of this report.
Indec also reported construction activity indicators for February.
Industrial activity fell by 8.5% yoy in February 2019, marking its tenth consecutive drop.
Bolsonaro will reportedly meet with six or more party leaders throughout the day.
It is important to watch the outcome of these meetings closely, to gauge the lawmaker's positions may evolve throughout the next weeks.
We now forecast a 0.1% mom/sa decrease for March’s industrial production
Chilean central bank is following the global liquidity tide, while also reacting to domestic issues that reflect a slower inflation convergence to the 3% target
Quarterly moving average remained stable in February.
Overall, the Chilean central bank is following the global liquidity tide and reacting to developments that reflect a slower inflation towards the 3% target.
Stable rates for most of this year is the likely base case scenario
The week was marked by a generalized drop in confidence among all sectors, reinforcing our view of weak growth in early 2019.
The national unemployment rate reached 12.4% in February, in line with our call and 0.1 p.p. below the market’s.
BCB released its 1Q19’s quarterly inflation report.
The index accumulates a loss of 8.3 points in the last three months
Confidence fell among consumers of all income classes
Overall seasonally-adjusted delinquency remained virtually stable at 2.9%.
CAGED (formal job creation) registered a net creation of 173k jobs in February
We expect the Selic rate to remain stable at next meetings.
CAGED registered a net creation of 173k jobs in February.
We expect a central bank hike only by the end of the year
We only expect a rate hike by the end of the year
Decelerating activity also led to higher unemployment in 4Q18.
We project a GDP contraction of 1.2% for this year.
The committee now sees the balance of risks to inflation as symmetric
We believe that the committee will keep the Selic rate stable at 6.5% p.a.
Inflation forecasts are anchored, in a context where the level of slack in the economy remains high.
For 2019, we see GDP growth moderating to 3.2%
In year-over-year terms, the indicator came in at 2.1%
For 2019, we see GDP growth moderating to 3.2%
Year-over-year, the index increased 3.6%
Year-over-year, the index increased 1.9%, from 0.6% in the previous month
Year-over-year, the index increased 1.9%, from 0.6% in the previous month
The analysis by the CCJ is the first step towards approving the pension reform, presented by the government to Congress on February 20
Our preliminary forecast for the IPCA in March is 0.51%, with the year-over-year change picking up to 4.33%
Our preliminary estimate for February is a 1.4% increase at the margin
Our preliminary forecast for the IPCA in March is 0.51%, with the year-over-year change picking up to 4.33%.
Despite the strong increase in auto production, demand data remain weak, posting mixed results in February
The inflation rates will likely remain low this year
Despite the strong increase in auto production, demand data remain weak for the month
We revised our yearend forecast for 2019 to 3.6%, due to recent downside surprises
The inflation rates will likely remain low this year
With the result, inflation reached the central bank’s 3% target, further enhancing the case for stable rates for the time being
We revised our yearend forecast for 2019 to 3.6%, due to recent downside surprises.
With the result, inflation reached the central bank’s 3% target, further enhancing the case for stable rates for the time being
Looking ahead, we expect GDP to grow 2.0% in 2019 and 2.7% in 2020, assuming progress in reforms
The decisions go in the right direction, given the deterioration of the inflation outlook and the proximity of the wage bargaining season
We expect GDP to grow 2.0% in 2019 and 2.7% in 2020, assuming reforms advance. Importantly, the earliest indicators for 1Q19 add downside to our call
We expect the unemployment rate to slide to 11.8% by year-end and to 11.5% by the end of 2020
We expect the unemployment rate to slide to 11.8% by year-end and to 11.5% by the end of 2020.
His speech focused on creating a sense of continuity, praising both the work done by the current administration
We expect economic activity to slow to 1.7% this year, with risks tilted to the downside
His speech focused on creating a sense of continuity
We expect economic activity to slow to 1.7% this year, with risks tilted to the downside
Fitch has kept Chile’s rating stable since the one notch downgrade implemented in August 2017
We expect inflation to reach 3.8% for the end of this year.
The education component posted the major positive monthly change
The reform will now be examined by the Constitution and Justice Committee (CCJ) as well as special commissions
In year-over-year terms, the inflation registered a 3.73% change