Latin America Data Watch: Oil relief meets a hawkish Fed

Research evidence excerpt

Latin America Data Watch: Oil relief meets a hawkish Fed

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trade surplus forecast to US$21bn. Our concerns over Colombia’s fiscal outlook persist. Tax col-

lection is softening, spending remains in high gear, and theFinally, job losses appear to have ceased. While employment

Treasury’s local‑currency cash buffer remains at historicallygrowth remains modest as of April (+0.1% m/m sa), firmer

low levels. The underlying fiscal position continues to deteri-activity momentum and gradual job creation should provide

orate, with the primary deficit set to remain near record highs,additional support to government approval rates in 2H26.

even as the recently published Medium Term Fiscal Frame-

Chile: The CBC holds the line as risks even work (MTFF) assumes a sizeable—though, in our view, high-

out ly unlikely—consolidation this year. Specifically, the magni-

Diego W. Pereira tude of spending adjustment implied for 2H26 looks difficult

to deliver in practice, even if regime change is confirmed. We

The CBC kept the policy rate unchanged at 4.5%, as expect- therefore await the outcome of the second round, any revised

ed, in a unanimous decision, and provided a more construc- fiscal projections from the incoming administration, and the

tive scenario when it comes to inflation convergence to target debate around the 2027 Budget to better assess the fiscal poli-

by the policy horizon, helped by lower crude oil prices. The cy path ahead.

Board now judges that the balance of risks to inflation has

been moving toward equilibrium, though it cautions that the Ecuador: April trade result surprised to the

macroeconomic outlook remains unusually uncertain. The downside

Middle East conflict has not been definitively resolved and Lucila Barbeito

global oil supply has not normalized.