*

Colombia c.bank cuts rates by 50 bps

*

Brazil private economists forecast two 50-bps hikes this

year

*

Chile's president proposes 2.7% spending increase in 2025

budget

*

Mexico's president-elect Sheinbaum to take office on

Tuesday

*

Latam FX down 0.3%, stocks down 1%

(Updated at 3:30 p.m. ET/ 1930 GMT)

By Ankika Biswas and Shashwat Chauhan

Sept 30 (Reuters) - Colombia's peso slipped on Monday

after the country's central bank opted for a modest interest

rate cut, while an index tracking Latin American currencies was

on course for its biggest monthly advance in 10 months, riding

on a metal prices rally.

The Colombian peso weakened 0.4% against the dollar

after its central bank cut the benchmark interest rate by 50

basis points to 10.25%, a moderate cut as policymakers responded

to local inflationary pressures despite international

relaxations in borrowing costs.

"Risk premiums in LatAm have increased, with Colombia seeing

a notable rise due to falling oil prices and challenging fiscal

conditions, despite the rate cut and further reductions expected

from the US Fed," said Andres Abadia, chief LatAm economist at

Pantheon Macroeconomics.

"Elevated geopolitical risk and increased domestic fiscal

uncertainty have been significant factors preventing a 75bp rate

cut."

The Colombian decision followed a 25-bps rate hike by Brazil

and a 25-bps cut by Mexico this month.

A survey showed Brazil's private sector economists now

project a more restrictive path for interest rates, with two

50-basis-point hikes expected this year and higher borrowing

costs next year.

Brazil's real was down 0.4% on the day, but was the

top Latin American currency performer for the month with a near

3% jump against the greenback.

Data from Brazil showed the country's public sector posted a

larger-than-expected deficit in August, driven by a mismatch

between central government revenues and expenditures.

The MSCI index for Latam currencies was set

for its best month since last November. The stock index

dipped 1% on Monday, though was set for

quarterly gains.

The strength in Latam asset classes has been fueled by

optimism around a Federal Reserve interest rate cut and soaring

metal prices on the back of top consumer China's stimulus

measures that have shored up the metals demand outlook.

Top copper producers Chile's peso and Peru's sol

also enjoyed monthly gains on the back of the recent

rally in the red metal's prices.

Chile's government is proposing a 2.7% annual increase in

its 2025 budget, President Gabriel Boric said, adding plans to

boost pensions, healthcare and focus on increasing national

security.

Mexico's peso was up 0.2% in choppy trading. Incoming

President Claudia Sheinbaum will take office on Tuesday.

Meanwhile, Argentine President Javier Milei intends to shake

up the country's mid-term legislative elections next year, as

the country battles its worst economic crisis in decades.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1168.74 -0.49

MSCI LatAm 2237.57 -0.99

Brazil Bovespa 132124.13 -0.46

Mexico IPC 52567.99 -0.4

Chile IPSA 6490.72 -0.61

Argentina Merval 1694669.2 -1.916

7

Colombia COLCAP 1311.64 -0.69

Brazil real 5.4555 -0.42

Mexico peso 19.6713 0.16

Chile peso 898.5 0.13

Colombia peso 4194.89 -0.41

Peru sol 3.6923 0.14

Argentina peso (interbank) 968.5 -0.154878678

Argentina peso (parallel) 1215 2.469135802