LatAm Weekly – April 5

Brazil – Band Aid Operation by Bolsonaro President Bolsonaro has accused influential political parties of ”engaging in old politics” referring to the old guard’s corrupt proclivities. Moreover, Finance Minister Guedes has traded insults with deputies, reminding them that their pension is 20 times larger than that of an ordinary citizen. Few would argue that there barbs were conducive to the political dialogue. So, President Bolsonaro met with party leaders yesterday to apologize for the attacks. Bolsonaro proposed to meet with party leaders once per month, and with congressional leaders in separate meetings with the same regularity. Hopefully this repairs the tone of the dialogue. Mexico – Let us Talk USMCA Things are becoming complex. US speaker of the House of Representatives, Nancy Pelosi, wants to reopen USMCA trade negotiations, something which US Trade Representative Robert Lighthizer vehemently opposes. Let us see if Pelosi’s position shifts after the Mexican congress approves tighter labor laws (which should be in April). If the Democrats still oppose it then, there are far fewer options at Mexico’s disposal to expedite the approval process. Stay tuned. Mexico – Will President Trump Close the Border or Imposing Tariffs? Likely Neither. Lately there has been an avalanche of news regarding threats from President Trump to Mexico. The exchange rate has not reacted much. Should it ? Colombia – Changes to the Fiscal Rule Unlikely to Trigger Negative Action by Rating Agencies The independent committee that sets the fiscal targets announced on Friday three changes: 1) the structural fiscal deficit path will remain unchanged, 2) cyclical revenues are forecasted to be higher than previous projections (which should reduce the headline fiscal deficit [sic]), and 3) there will be a temporary increase in spending due to Venezuelan migration, increasing the headline deficit. Chile - Despite Low Inflation and Weakening Growth, BCCh Remains Neutral If one reads the policy rate decision communique from two weeks ago (when the BCCh left its policy rate unchanged at 3.0% as widely expected) and the Monetary Policy Report (IPOM in Spanish) for March Published of last Monday , one might ask: why is the BCCh continuing with its mildly hawkish guidance?