Latin America News
LAST UPDATE: June 11, 2025
Brazil’s Annual Inflation Slows for the First Time Since January
Brazil’s annual inflation rate eased to 5.32% in May, down from 5.53% in April, marking the first decline since January.
Insight
The slowdown was led by softer food and transportation costs, helped by strong harvests and lower fuel prices. Although still above the central bank’s 3% ± 1.5% target, this moderation may provide room for the central bank to adopt a less aggressive tightening stance at its next policy meeting. Current benchmark rates at ~14.75% are beginning to restrain price pressures. The inflation deceleration could strengthen arguments for a pause or dovish shift. However, persistent core inflation and labor market dynamics will likely stay in focus.
Brazil’s constitutional change for central bank financial autonomy is essential, says governor
Brazil’s central bank governor emphasized the importance of amending the constitution to grant the bank full financial autonomy, beyond its current operational independence.
Insight
The governor argues that financial autonomy—covering budget and funding control—is crucial for enhancing oversight, hiring, and long-term planning. While operational autonomy was granted in 2021, financial autonomy remains stalled, with opposition citing potential fiscal risks. Pursuing a constitutional change amid debates signals ongoing tension between monetary independence and government spending priorities. Success would solidify credibility, but failure could undermine the central bank’s capacity to resist political pressures.
Brazil’s central bank chief signals imminent bridge solution for real estate financing
Central Bank Governor Gabriel Galipolo revealed plans for a “bridge process” to support real estate financing, offsetting funding shortfalls from declining savings deposits.
Insight
With the Selic rate at 14.75%, savers have shifted away from low-yield savings accounts, draining funds for real estate. The proposed bridge funding mechanism would temporarily fill the gap while systemic solutions are developed. Galipolo’s remarks reflect proactive central bank involvement in credit markets and tie into broader efforts to secure financial autonomy via constitutional amendment, highlighting an integrated strategy to stabilize monetary policy and credit flows.
Colombia to suspend fiscal rule as public finances worsen, source says
Colombia is temporarily suspending its fiscal rule via an “escape clause” to allow spending beyond the 5.1% deficit limit, in light of rising deficits.
Insight
The move reflects deteriorating public finances—2024’s deficit already hit 6.8% of GDP—and aims to accommodate urgent fiscal needs. The government may still implement spending cuts or borrowing, but the message prioritizes growth over rigid fiscal discipline. Markets responded by weakening the peso and widening bond spreads, reflecting investor concerns. Moody’s will closely monitor fiscal transparency and medium-term adjustment plans. The suspension offers short-term flexibility but escalates long-term fiscal risks amid looming elections.
Bank of Mexico poised for 50 basis points rate cut despite inflation rebound
Despite May inflation rising to 4.42%—above target—the Bank of Mexico is expected to cut rates by 50 bps to 8% on June 26, marking its fourth straight cut.
Insight
The bank believes that policy rates are still too restrictive given economic slippage and marginal inflation overshoot. Critics suggest a smaller cut or pause amid rising consumer prices, but the majority view supports easing to bolster growth. This reflects a delicate balance between inflation control and economic stimulus, with future moves hinging on inflation trajectory and activity data.
More Canadians Are Ditching US Road Trips With 38% Annual Drop
Canadian cross-border auto trips to the U.S. declined by 38% year-over-year, reflecting a broader travel shift away from the U.S.
Insight
This decline is part of a growing Canadian boycott of U.S. travel and goods amid trade tensions, reflecting patriotic sentiment and resistance to tariffs. Both surveys and booking data confirm the shift, with Canadians opting for domestic or other international destinations like the Caribbean. U.S. border regions and tourism businesses are already feeling the economic impact. The trend signals reshaping travel patterns and bilateral consumer behavior.
Milei clashes with Argentina’s protectionist outpost at end of the world
Argentina’s free-market President Javier Milei is facing a showdown with Tierra del Fuego authorities who maintain high tariffs to protect local industries.
Insight
Milei’s reform agenda, aimed at liberalizing trade and cutting subsidies, is colliding with regional protectionism. The standoff highlights tensions between national policy ambitions and local economic realities. Sustained pressure from Buenos Aires could undermine local employment in the island territory. How this dispute resolves may offer early insights into how far Milei’s reforms can push through decentralized Argentina.
