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Brazil's annual inflation exceeds 5%

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U.S. CPI rises less then expected in February

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Brazil, Mexico say no immediate retaliation to tariffs

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Latam FX up 0.4%, stocks add 1.2%

(Updates with mid-session trading)

By Shashwat Chauhan and Purvi Agarwal

March 12 (Reuters) - Most Latin American currencies

firmed on Wednesday after a U.S. inflation reading that hinted

at sooner cuts by the Federal Reserve, though uncertainty around

U.S. President Donald Trump's trade policies showed no signs of

abating.

U.S. consumer prices increased less than expected in

February, but the improvement is likely to be temporary against

the backdrop of aggressive tariffs on imports that are expected

to raise the costs of most goods in the months ahead.

"This data reinforces expectations that the Fed may slightly

soften its monetary policy rhetoric... but will probably

maintain caution before leaning fully toward a more dovish

stance," said Quasar Elizundia, research strategist at

Pepperstone.

Traders currently price in more than 70 basis points of

easing till the end of the year, according to LSEG data.

A 2% jump in oil prices aided a 0.5% gain in the

Colombian peso, while Mexico's strengthened 0.4%.

Brazil's real reversed early declines to climb 0.2%

as investors parsed inflation data that showed annual inflation

exceeded 5% for the first time in over a year in February.

It remained well above the official target ahead of a policy

meeting at which the central bank is likely to press ahead with

aggressive monetary tightening.

"Next week's meeting will see the final 100 bps hike in the

tightening cycle, but the likelihood of one or two smaller hikes

after that is rising, with inflation far above the central

bank's target range," said William Jackson, chief EM economist

at Capital Economics.

Tariff headlines continued to dominate, with U.S. Commerce

Secretary Howard Lutnick saying nothing would stop President

Donald Trump's expanded 25% tariffs on steel and aluminum until

U.S. domestic production is strengthened, and that Trump will

add copper to his trade protections.

Brazil's Finance Minister Fernando Haddad and Mexican

President Claudia Sheinbaum said they would not immediately

retaliate and would instead seek negotiations with the U.S.

government, while Canada announced counter tariffs.

Chile's peso fell 0.2%, while MSCI's index for

Latin American currencies rose 0.4%, on track to

snap a three-session losing streak.

The equities gauge advanced 1.2%, as

regional bourses bounced back after a sell-off earlier this

week.

Argentina led gains with a 5.3% jump, while

Colombia's COLCAP was up 1.2%

Elsewhere, South Africa's rand was last down 0.8%

after the National Treasury proposed a smaller hike in

value-added tax in a revised budget aimed at ending deadlock

within the coalition government.

Ukraine's international dollar bonds broadly advanced around

1 cent a piece after Kyiv expressed support for Washington's

proposal of a 30-day ceasefire with Russia.

The National Bank of Poland (NBP) left its main interest

rate unchanged at 5.75%, and the zloty was little

changed.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1111.23 0.19

MSCI LatAm 2006.94 1.14

Brazil Bovespa 123659.45 0.12

Mexico IPC 51935.91 0.83

Chile IPSA 7391.3 0.35

Argentina Merval 2273190.7 5.27

8

Colombia COLCAP 1597.92 1.23

Brazil real 5.7997 0.18

Mexico peso 20.1896 0.35

Chile peso 936.46 -0.36

Colombia peso 4103.5 0.46

Peru sol 3.661 0.03

Argentina peso (interbank) 1065.75 0

Argentina peso (parallel) 1210 0.83