Global Economy
The global cycle is changing
Global growth is improving and we believe global inflation will start to gradually normalize, as the output gap in developed economies turns positive and deflationary pressure from China eases.

LatAm
Easing cycles closer to an end
Activity in the region is gradually recovering, but mixed inflation pictures are leading to diverging monetary policy responses. Still, we note that easing cycles, where ongoing, are coming closer to an end. 

Brazil
Getting closer to the end of the cycle
In a context of gradual economic recovery and less benign inflation at the margin, the central bank signaled another interest rate cut in December, but left the February decision wide open.

Argentina
Renewed optimism faces no shortage of challenges
The administration emerged stronger from the mid-term elections, which will allow the ruling coalition, led by president Macri’s Cambiemos, to seek tactical alliances to pass key fiscal reforms.

Mexico
Domestic and external uncertainties return
The latest round of NAFTA renegotiation raised the odds of a break-up.  In addition, PAN party has split, benefiting the ruling PRI and anti-establishment candidate Andrés Manuel Lopez-Obrador.

Chile
Easing-cycle discussion still alive
Expansionary monetary policy, improving private sector sentiment and higher global growth will all aid an activity recovery. Limited inflationary pressures mean that further rate cuts cannot be ruled out.

Peru
More than just green shoots
Peru’s activity is showing more than just green shoots, with indicators pointing towards a strong pick-up in coming quarters. Inflation is falling faster and we believe the central bank will seize the opportunity to deliver the final (25-bp) rate cut of its easing cycle in November.

Colombia
Rate cut comes ahead of schedule
In a split decision, the central bank surprisingly cut the policy rate by 25 bps in October, to 5.0%, on the back of a more favorable inflation outlook. We still expect the easing cycle to end with a policy rate of 4.5%.

Commodities
Higher copper prices, lower agricultural prices
Commodity prices rose in October, boosted by 4.4% increase in its energy subcomponent. We increased our yearend copper and nickel forecasts. On the other hand, we lowered our forecasts for agricultural prices.