LatAm : The Week that Passed

Mexico - Banxico sounds neutral. Banxico seemed to have struck a good balance between lower growth , still sticky core inflation, and concerns about the policies of President Lopez Obrador—which could cause volatility in the FX and thus impact inflation . W e continue to expect two cuts of 25bps each in late Q3 or Q4.  Brazil - COPOM with minor changes, and a bit more hawkish tone We maintain our forecast for 2019, which projects 50bps of hikes towards the end of the year. However, there is a risk that the BCB could delay the start of its hiking cycle to mid-2020. Colombia – Trip Notes On February 4-6, we met with central bank officials, local analysts, pension fund managers and bank officials. These ar e the takeaways from our trip. After the trip our worries about the fiscal position in 2019 were assuaged but now we are more worried about the fiscal pressures in 2020 than before.  Tweaking the fiscal rule seems increasingly likely.  We believe rati ng agencies will give Colombia a negative outlook. However, downgrades are unlikely at least in 2019.  We believe that BanRep will deliver one or two 25bps hikes in 2019. But two hikes are slightly more likely than one. The sale of Ecopetrol stock now seems less likely in 2019. But could become an important topic in 2020.