Latin America News
LAST UPDATE: June 25, 2025
Carney Says Canada Can Hit New $110 Billion NATO Bill With Mines
Prime Minister Mark Carney stated Canada can meet the targeted $110 billion (5% of GDP) NATO spending benchmark by leveraging its critical-minerals sector.
Insight
Canada is intertwining defense and resource strategy by planning to fund NATO obligations through domestic mineral development—an innovative, albeit resource-intensive, fiscal approach to meet geopolitical commitments.
Canada’s annual inflation unchanged at 1.7% in May, core measures slightly ease
In May 2025, Canada’s annual CPI remained steady at 1.7%, matching April, due to lower gasoline and softer shelter, food, and transport costs. Core inflation indicators (CPI-trim/median) eased to 3%, the top of the Bank of Canada’s target range. Monthly CPI rose 0.6%, driven by travel, lodging, and energy. Analysts see this data as influencing July 30 BoC rate decisions, with markets placing a ~68% chance of holding rates. (gopinath.scholars.harvard.edu, reuters.com)
Insight
The stability in headline inflation but slight core cooling suggests BoC may pause further cuts, pending June inflation and GDP data—highlighting the cautious tone of monetary policy decision‑makers.
Brazil central bank signals pause in rate hikes as tightening effects yet to be felt
After raising its benchmark Selic rate to 15% (a 450 bps increase since September), Brazil’s central bank said it’s pausing further hikes to assess lagging impacts. Despite inflation still well above 3%, policymakers stressed readiness to resume if needed, aiming to hold rates at contractionary levels until inflation converges.
Insight
Pausing the tightening cycle shows confidence in the delayed effectiveness of policy but also underscores vigilance. Continuation of high rates will support inflation anchoring, while allowing time to evaluate economic response.
Mexico’s Headline Inflation Slows on Eve of Key Rate Decisions
Mexico’s headline inflation for early June decelerated to 4.51%, in line with forecasts, while core inflation rose 0.22% monthly. Annual headline inflation rose from 4.22% in May. With Banxico having cut rates by 50 bps to 8.5% in May, analysts see room for another 50 bps cut this week.
Insight
The slight cooling ahead of policy decisions gives Banxico space to continue easing. However, remaining above the 3±1% target keeps policymakers wary of inflation persistence.
New Barbados bond bolsters push for disaster debt pause clauses
Barbados issued a $500 million bond, replacing existing debt and freeing ~$370 million through 2029. It’s the first “benchmark” sovereign bond including climate/pandemic pause clauses for up to two years, offering resilience if hit by disasters. Precedent may encourage other nations to adopt similar features without requiring high yields.
Insight
Barbados is spearheading innovation in sovereign debt markets, linking sustainability and financial stability. Embedding disaster‑pause clauses could become a global norm, easing fiscal burdens for climate‑vulnerable countries.
IMF urges structural reforms to revive Chile’s economic growth
The IMF stated Chile’s growth potential hinges on structural reforms, including increased R&D, public‑private research commercialization, innovation policies, and leveraging its copper, lithium, solar, and wind sectors. There’s no “silver bullet,” but a holistic reform agenda could boost growth and counter social/fiscal pressures.
Insight
Chile must pivot from cyclical fixes to long-term supply-side reforms. Its rich mineral and renewable resources combined with stronger R&D and tech commercialization could drive sustainable, higher productivity growth.
El FMI insta a Guatemala a aumentar el gasto público para elevar la inversión privada
The IMF recommended that Guatemala increase public spending to boost private investment. It acknowledged fiscal expansion in the 2024 amended budget (2.7% deficit), but urged better quality and efficiency via faster execution, anti-corruption agenda, and eventually comprehensive tax reform to maintain medium-term debt sustainability. (europapress.es)
Insight
The IMF sees fiscal space now but warns that spending must be smarter—better public infrastructure and governance are key to catalyzing private investment, balancing growth with sustainable debt.
