Chile and Peru will likely stimulate their economies with additional interest rate cuts this week, while Brazil is expected to hint on how much more monetary policy easing the central bank can afford in the next few months. Chile's central bank is expected to lower interest rates by as much as 50 basis points on Thursday, from its current level of 1.75 percent.
Morgan Stanley, while forecasting a 25 basis points cut in Chile, told its clients that the central bank has guided investors for a cut in the 25-to-50 basis-point range. Also on Thursday, Peru's central bank is expected to cut interest rates by at least 100 basis points, from the current 5 percent level.
Citigroup expects a 100 basis points cut, saying in a research note: "Although the central bank has cut nominal rates by 150 bp this year, real rates remain too high for the current environment, thus muting the monetary stimulus." Barclays is forecasting a 150 basis points cut for Peru. On Tuesday, Chile reports its IMACEC economic activity index for March, which is expected to show continued declines after a 3.9 percent drop in February.
Minutes from Brazil's April 29 monetary policy committee (COPOM) are also anticipated for their insight into how much further the central bank may lower interest rates. The report is due on Thursday, May 7. "COPOM signals it is slowing down the pace of easing, so that it can cut for longer," Morgan Stanley economists said on Friday.
Brazilian industrial production (IP) data for March will also give clues for economic conditions. The report is scheduled for release on Tuesday, May 5. Citigroup Global Markets wrote clients on Friday it expects a 2.5 percent rise in Brazilian IP for in March, implying a 7.8 percent decline on a year-over-year basis.
Brazil - April trade balance. Barclays and Citigroup and Morgan Stanley all expect a $3.2 billion surplus. Chile - March IMACEC. Barclays and Morgan Stanley forecast a drop of 2.0 percent while Citigroup expects a 1.6 percent year-over-year decline. Colombia - April CPI. Barclays expects a 0.43 percent rise while Citigroup sees a 0.25 percent increase. Mexico - April CPI. A Reuters poll forecasts a 0.40 percent rise in core inflation while headline inflation is expected to rise 0.37 percent.