LatAm Weekly – March 8

Mexico – CPI is Gradually Coming Down D espite C ontractual W ages I ncreasing At its lowest level since December 2016, annual inflation is now at 3.94%, and is below the 4.0% upper bound of the target band. Mexico – What are Rating Agencies Really Saying? There is a 33% chance that S&P lowers Mexico to BBB from its current rating of BBB+ in one year. This means that the rating downgrade of the rating will likely be in 2020 , if indeed materializes . Therefore, the downgrade is not imminent if the trend of deterioration continues at the same pace. Mexico – MORENA could Tighten Regulation on Rating Agencies, President AMLO disagrees The party of President Lopez Obrador (AMLO), MORENA, presented a proposal in the senate that could revoke the authorization of rating agencies to operate in the country. However, AMLO said that his government will respect the work of rating agencies . Colombia –Inflation? What inflation? We now expect one hike instead of two in 2019 With inflation pressures subsiding, BanRep will lean towards one hike of 25bps in H2 2019 instead of two hikes as we previously expected. Chile – Inflation pressures subside due to food prices CPI for February came out at 1.73% YoY which was below market expectations (Bloomberg consensus: 1.8% YoY). After peaking in September with the revised series—the index was recently modified and the January CPI was the first new-and-improved reading. Chile –Monthly GDP Index in-line with Expectations—but the Economy Seems to be Slowing The economy is expanding at a rate that is below the BCCh’s Monetary Policy Report (IPOM) forecast . T he monthly GDP proxy, IMACEC, for January, came out at 0.3% MoM sa or 2.4% YoY nsa . Chile –Electricity Prices of Distributors to Increase 18% T hink tank EcomEnergia Chile estimates that energy distributors will face an increase in electricity prices of around 18% .