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Survey shows Mexico likely to cut interest rate to 10.50%

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Brazil's inflation undershoots all estimates

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Chile expected to cut rate by 25 bps in October- poll

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Latam FX down 0.2%, stocks down 0.2%

By Ankika Biswas

Sept 25 (Reuters) - Most Latin American stocks and

currencies retreated on Wednesday, a day after logging strong

gains on the back of a spike in commodity prices, with the

Mexican peso the worst performer in countdown to this week's

interest rates decision.

Mexico's peso dropped 0.7% against the dollar,

leading the MSCI index for Latam currencies 0.2%

down after a 1% jump on Tuesday following China's stimulus

measures that sparked a rally in oil and metal prices.

All eyes are on Mexico's policy decision on Thursday,

wherein another interest rate cut is expected, according to

nearly all analysts surveyed in a Reuters Open, as inflation

slows and the Federal Reserve already approved an aggressive

rate cut.

Colombia's peso hit a one-week low, owing to an over

1% fall in oil prices that also weighed on Mexico's peso.

Colombia's central bank policy decision is also due next week.

Further, economic committees in Colombia's Congress on

Tuesday rejected the government's proposed budget for 2025 amid

fierce debate over its $126 billion value, but the government

could push it through by decree.

Brazil's real also weakened 0.3% after data showed

inflation slowed much more than expected in its mid-September

reading, in the first CPI figures released since the country's

central bank decided to embark on a monetary tightening cycle.

The largest Latam country also recorded a

wider-than-expected current account deficit in August, as trade

surplus more than halved from a year earlier and the services

account deficit deepened.

Meanwhile, a poll showed Chile is expected to lower its

benchmark interest rate by 25 basis points from the current

5.50%.

The Chilean peso bucked the weak trend in Latam

currencies and edged 0.1% higher against the dollar.

Argentina's economic activity and retail sales data are also

due later in the day.

Talking about growth across Latam countries, Capital

Economics' EM economist Kimberley Sperrfechter expects it to be

weaker than most expect in the next couple of years amid tight

policy and worsening terms of trade. Plus, monetary easing will

be slow as inflation could stay above central banks' targets in

many countries.

Elsewhere, Czech Republic cut its rates by 25 basis points

as expected, maintaining a slowed-down pace of easing as

inflation hangs near target, the crown holds steady and the

economy slowly recovers. The central bank, however, stated its

board does not have any commitment on continued rate cuts.

The crown was last down 0.1% against the euro,

having hovered on the weak side of the 25-per-euro level

recently since hitting a two-year low of 25.522 in August.

HIGHLIGHTS:

** Czech government approves higher budget deficit targets

after floods

** UAE c.bank sees 4% GDP growth in 2024, state news agency

reports

Key Latin American stock indexes and currencies at xx GMT:

Equities Latest Daily % change

MSCI Emerging Markets 1137.32 0.47

MSCI LatAm 2264.4 -0.20

Brazil Bovespa 132317.64 0.12

Mexico IPC 53497.15 -0.29

Chile IPSA 6423.27 -0.41

Argentina Merval 1774667.88 NULL

Colombia COLCAP 1322.4 -0.94

Currencies Latest Daily % change

Brazil real 5.4709 -0.3

Mexico peso 19.447 -0.73

Chile peso 909.1 0.14

Colombia peso 4176.5 -0.56

Peru sol 3.7528 -0.12

Argentina peso (interbank) 966.5 -0.103466115

Argentina peso (parallel) 1225 1.632653061