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BBVA Acknowledge Hawkish Turn from LatAm Central Bankers

LATIN AMERICA
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  • BBVA have noted the tone adopted by central bankers (including LatAm) at the recent IMF meetings has been increasingly hawkish, building on recent UST yield and USD pressures. This more astringent stance is a positive for carry, however, BBVA acknowledge that as was evident in the last two weeks, when volatility kicks in, carry fades and the potential for larger unwinds remains a significant risk.
  • The most moderate was Chile’s central bank President Rosanna Costa, who said plans to extend the easing cycle remain intact but highlighted increased caution in the bank’s scenarios and projections.
  • Brazil’s central bank governor, Roberto Campos Neto, also underscored that uncertainties have risen and laid out a scenario that would lead to a slower easing cycle, while Colombia’s BanRep governor Leonardo Villar and other board members also adopted a reasonably cautious tone in their meetings and presentations.
  • Mexico’s central bank deputy governor, Jonathan Heath, also kept to a hawkish tone and even suggested the bank may vote unanimously to hold rates at its next meeting in May, suggesting the bank has not even initiated an easing cycle.
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  • BBVA have noted the tone adopted by central bankers (including LatAm) at the recent IMF meetings has been increasingly hawkish, building on recent UST yield and USD pressures. This more astringent stance is a positive for carry, however, BBVA acknowledge that as was evident in the last two weeks, when volatility kicks in, carry fades and the potential for larger unwinds remains a significant risk.
  • The most moderate was Chile’s central bank President Rosanna Costa, who said plans to extend the easing cycle remain intact but highlighted increased caution in the bank’s scenarios and projections.
  • Brazil’s central bank governor, Roberto Campos Neto, also underscored that uncertainties have risen and laid out a scenario that would lead to a slower easing cycle, while Colombia’s BanRep governor Leonardo Villar and other board members also adopted a reasonably cautious tone in their meetings and presentations.
  • Mexico’s central bank deputy governor, Jonathan Heath, also kept to a hawkish tone and even suggested the bank may vote unanimously to hold rates at its next meeting in May, suggesting the bank has not even initiated an easing cycle.