Monday, 26 January 2009

The Weekly Agenda for Latin Markets: Brazil Copom Minutes, Colombia Rate Decision; Fed Monetary Policy Meeting

The last week of January will be quite busy in terms of economic releases and policy decisions. Tomorrow the U.S. Federal Reserve announces its decision on interest rates. The day after, Ben Bernanke, the Fed's chief, (photo) will likely announce the purchase of long-term Treasury securities to boost liquidity and drive down yields. This week we will also have the preliminary report for fourth-quarter gross domestic product in the U.S. In Latin American markets, two main events will gather attention from investors. One is Thursday's release of the monetary policy minutes for last week's decision by Banco Central do Brasil to cut its benchmark lending rate target to 12.75 percent. The other is the Colombian rate decision for Friday afternoon.

The Copom minutes may indicate that the central bank has already carried out a "relevant portion´´ of its easing cycle, and that such event won't put at jeopardy its inflation target for this year.
On the other hand, the committee will play up recent data pointing to growth weakness. This will be relevant, for it will also help ease political pressure on central bankers -- who have been under attack by entrepreneurs, unions and government officials over their stance on interest rates.
About the Colombian rate decision, the market consensus points to the Repo Rate being cut to 9 percent. The bank is certainly worried about the rapid deterioration of economic data -- the same Friday a report on the December unemployment rate will be out.

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