Latin America News
LAST UPDATE: May 29, 2025
Milei Intervenes in Currency Market Despite Letting Argentine Peso Float
President Milei intervenes in the currency market to stabilize the Argentine peso, despite previously allowing it to float.
Insight
The intervention suggests challenges in maintaining a fully floating currency amidst economic volatility. While a floating exchange rate offers flexibility, sudden market movements can necessitate government action to prevent instability. This move reflects the delicate balance between market freedom and economic control. It also indicates the government’s responsiveness to currency fluctuations that could affect inflation and public confidence. The situation underscores the complexities of monetary policy in emerging economies.
Brazil’s central bank unlikely to cut rates before 2026, Itau says
Economists at Itau Unibanco predict that Brazil’s central bank will maintain high interest rates until at least 2026 to align inflation expectations with the 3% target.
Insight
The decision to keep the Selic rate at a near 20-year high of 14.75% reflects the central bank’s commitment to controlling inflation. The recent IOF tax hike adds to the tightening effect, indicating a cautious approach to monetary policy. This stance may slow economic growth, projected at 2.2% in 2025, down from 3.4% in 2024. The prolonged high rates could impact investment and consumer spending, posing challenges for Brazil’s economic recovery.
Bank of Mexico lowers 2025 growth forecast, bringing it close to zero
The Bank of Mexico has reduced its 2025 GDP growth forecast to 0.1%, citing sluggish domestic activity and uncertainties related to U.S. trade policy.
Insight
The sharp downgrade from the previous 0.6% forecast highlights the fragility of Mexico’s economy. External factors, particularly U.S. trade policy shifts, are significantly influencing economic prospects. The central bank’s cautious outlook suggests limited room for monetary easing, which may be necessary to stimulate growth. This scenario underscores the interconnectedness of Mexico’s economy with global trade dynamics and the need for strategic policy responses.
Mexico’s Judicial Reform Is Now In the Hands of Confused Voters
For the first time, Mexicans will elect judges in a move aimed at combating judicial corruption, but critics warn it may increase organized crime’s influence.
Insight
The judicial reform represents a significant shift in Mexico’s legal system, transitioning from appointed to elected judges. While intended to enhance accountability, the lack of safeguards and the potential for politicization raise concerns. The resignation of Supreme Court justices and the bypassing of evaluation committees suggest institutional instability. This experiment in judicial democracy may have profound implications for the rule of law and governance in Mexico.
Carney’s Defense Spending Will Add Up to $46b to Economy, CIBC Says
Increased defense spending under Carney’s plan is projected to inject up to $46 billion into Canada’s economy, according to CIBC.
Insight
The substantial investment in defense is expected to stimulate economic activity, potentially boosting GDP and creating jobs. This move aligns with broader geopolitical trends where nations are enhancing military capabilities. However, the allocation of resources towards defense may prompt debates on fiscal priorities, especially concerning social programs and infrastructure. The long-term economic benefits will depend on efficient implementation and balancing other national interests.
