• Brazil's government is preparing to cooperate more closely with the central bank on regulatory issues like cryptocurrencies and meal vouchers next year when the bank gets new leadership, following occasional differences over policy on such matters.
• Incoming central bank chief Gabriel Galipolo, whose term starts in January following his appointment by President Luiz Inacio Lula da Silva, has delivered a hawkish message on monetary policy, showing he is not shy about hiking interest rates despite Lula's repeated demands for lower borrowing costs.
• However, the two are likely to find more common ground on regulatory matters, where the central bank has sometimes been at loggerheads with the Finance Ministry in recent years.
• Three Finance Ministry officials described on condition of anonymity a series of frustrated discussions with the central bank on matters ranging from regulation of crypto assets to allowing global trading platforms to list Brazilian public debt. Two of the ministry sources said that collaboration had suffered as the central bank became more withdrawn from policy discussions since gaining formal autonomy under a 2021 law.
• One official pointed to concerns about crypto asset regulation, which is being handled by the central bank without coordination with the government. That has complicated Finance Ministry policy on regulating online gambling since many sites are operating with cryptocurrencies, the source said. The central bank said earlier this year it expected to finalize its proposed crypto regulations by the end of the year.
• On another front, the government plans to resolve a long-standing impasse over new regulations to open up competition in the 150Bn reais (US$26.5Bn) meal voucher market. For years, tech companies, including Mercado Libre (MELI.O), have been looking to take a bigger bite of the market dominated by companies such as Sodexo and Edenred (EDEN.PA), for meal cards that firms must provide for full-time workers.
• Despite the impasses, the ministry sources expressed hopes for more collaboration with Galipolo in charge. A central bank source said improved cooperation would reset the "tone" of the relationship. "I really hope we'll have more integration on issues that don't affect the central bank's core (inflation) mandate," said another ministry source. "I'm not saying we want a seat on the Monetary Policy Committee - that's not it.

(Source: Reuters)

• Fitch Solutions maintains its forecast that real GDP growth in Barbados will slow from an estimated 6.3% in 2023 to 3.1% and 2.1% in 2024 and 2025, respectively.
• While Fitch’s outlook suggests a continued growth slowdown from 11.3% in 2022, it will remain strong by historical standards (growth averaged 0.0% between 2010 and 2019) and is underpinned by the continued expansion of the tourism sector as well as an upbeat outlook for private consumption.
• Of note, slowing inflation, alongside a continued recovery in the tourism sector, will provide tailwinds to private consumption in 2024. Price growth remains benign, coming in at just 1.2% year-on-year (YoY) in July 2024, and Fitch expects this to remain the case in the coming months thanks to a continued easing of global commodity prices.
• Combined with falling unemployment, Fitch believes that real household incomes are likely to perform well this year, boosting spending levels. Additionally, overnight stays are up 14.5% YoY to August and will continue to support direct (and indirect) job creation, boding well for consumer spending.
• That said, risks to the growth projections are to the downside. Should political tensions in the Middle East escalate and prompt a surge in global oil prices, this would feed into higher inflation in Barbados, blunting real incomes and constraining household expenditure. This would also likely limit growth in tourist arrivals.
• Moreover, severe weather conditions remain an ever-present risk to the Barbadian economy, with hurricanes posing a threat to both critical infrastructure and tourist arrivals. 

(Source: Fitch Solutions)

• British inflation slowed sharply last month and key price gauges watched by the Bank of England also fell, bolstering bets on a November interest rate cut and helping finance minister Rachel Reeves before her first budget.
• Annual consumer price inflation eased to 1.7% in September from 2.2% in August, the lowest reading since April 2021. The easing inflation was driven down by lower airfares and petrol prices, the Office for National Statistics said. A Reuters poll of economists had pointed to a reading of 1.9%.
• Interest rate futures showed investors were putting a 90% chance on two BoE quarter-point rate cuts by the end of this year, up from a roughly 80% chance on Tuesday. "Today's release removes another potential obstacle to the Monetary Policy Committee voting for a 25bps rate cut at its November meeting," said Martin Swannell, chief economist adviser to the EY ITEM Club consultancy.
• A less inflationary outlook would slightly improve the economic and fiscal outlook for the budget as Reeves struggles to find the extra money to invest in public services and new infrastructure without spooking investors.
• September's inflation reading is also used as a base month for many social benefits. Wednesday's weaker-than-expected reading may disappoint recipients, although it could offer Reeves a little extra leeway for her budget plans.

(Source: Reuters)

• U.S. import prices fell by the most in nine months in September amid a sharp decrease in the cost of energy products, pointing to a benign inflation outlook that keeps the Federal Reserve on course to continue cutting interest rates.
• The report from the Labour Department on Wednesday also showed import prices, excluding fuel, barely rising over the past three months. The report followed data last week showing slightly firmer consumer prices in September.
• While producer prices were unchanged last month, some components showed strength, which was expected to translate into higher monthly readings in the key inflation measures tracked by the U.S. central bank for its 2% target.
• "Import prices do not feed through directly to producer and consumer prices but are a signal inflationary pressures remain muted and adds some support to another rate cut in November," said Matthew Martin, a senior U.S. economist at Oxford Economics. "In tandem with falling prices at China's factory gates, import price gains will be modest."
• Import prices slipped 0.4% last month, the biggest drop since December 2023, after a revised 0.2% decrease in August, the Labor Department's Bureau of Labour Statistics said. Import prices were previously reported to have declined 0.3% in August. The drop in import prices, which exclude tariffs, was in line with economists' expectations.

(Source: Reuters)

• After the spike in August, consumer prices moderated in September with 12-month point-to-point (P2P) inflation coming within BOJ’s 4.0.0% to 6% target range at 5.7%.
• Despite this lower turnout relative to August, prices in the most volatile divisions have increased on average. The ‘Food and Non-Alcoholic Beverages’ rose 6.9%, ‘Transport’ was 9.1% higher and ‘Housing, Water, Electricity, Gas and Other Fuels Divisions was up 3.6%.
• Meanwhile, the month-over-month inflation rate decreased to 0.2%, with the All-Jamaica Consumer Price Index (CPI) falling from 140.7 in August to 140.5. A 4.0% drop in the 'Housing, Water, Electricity, Gas, and Other Fuels' category. Reduced electricity rate was the main driver of the moderation in prices month over month. In September, the Jamaica Public Service (JPS) announced a 34% reduction in the Fuel Charge component of customers’ bills. The  Fuel Charge component is a significant part of electricity bills.
• Additionally, a 0.3% decrease in the 'Transport' division, linked to lower petrol prices, also contributed to the overall reduction in inflation for the month.
• However, the decline was somewhat offset by a 0.7% increase in the index for the 'Food and Non-Alcoholic Beverages' division and a 5.8% rise in the 'Education' division. The increase in the 'Food and Non-Alcoholic Beverages' division reflects an increase in the prices of a range of produce, including some vegetables, roots and tubers. For the ‘Education’ division, the upward movement was attributed to higher tuition fees for private schools at the primary level.
• In the 'Education' division, the increase was largely due to rising tuition fees for private primary schools.
• The Bank of Jamaica’s (BOJ’s) latest Monetary Policy Committee (MPC) communication emphasised that current economic conditions are favourable for sustaining low, stable, and predictable inflation going forward which could pave the way for further rate cuts. This viewpoint remains unchanged, despite preliminary estimates suggesting a significant slowdown in Q2 GDP and the expected contraction in Q3, given the damage from Hurricane Beryl.

(Source: STATIN & NCBCM Research)

• Jamaica’s tourism sector is poised for continued growth, as global travel is expected to reach 1.5Bn travellers by the end of this year, with projections indicating nearly 3 billion tourists worldwide over the next two decades.
• Minister Bartlett encouraged local tourism partners to embrace innovation and adaptability in response to emerging trends, stressing the importance of preparing for the increasing influx of travellers by building capacity and providing exceptional service. He highlighted the resilience of the tourism sector, which has consistently outpaced overall global economic growth, expanding at an annual rate of 3% over the past 30 years. However, the Minister also warned that Jamaica must remain agile and innovative to navigate the evolving global landscape.
• In his presentation, Minister Bartlett unveiled a key strategy to expand Jamaica’s tourism market by increasing airlift from South America, starting with LATAM Airlines' new flights from Peru to Jamaica, set to begin on December 1. He also mentioned ongoing discussions with Azul Airlines to introduce flights from Belem, Brazil, and with Avianca regarding additional routes in South America, including Colombia. Minister Bartlett emphasized that enhancing airlift is essential for accessing new markets and further diversifying Jamaica’s visitor base.
• Additionally, Minister Bartlett announced plans for a marketing blitz in India, one of the fastest-growing economies in the world, with a roadshow scheduled for November. He also emphasized efforts to target Eastern Europe and the Schengen area, pointing out that these regions present significant potential for inbound tourism.
• To bolster these initiatives, the tourism minister announced at the JHTA’s  63rd Annual General Meeting that the Jamaican government has allocated J$1Bn for tourism marketing through the end of the financial year. Minister Bartlett expressed confidence that, with these strategies in place, Jamaica’s tourism sector is well-equipped for sustained success.

(Source: Travel Daily News)

• Guyana has launched a new high-yielding rice variety known as ‘GRDB 18,’ as part of the efforts to modernise the agricultural sector through innovation and technology.
• “This variety is very tolerant to water lodging, which is crucial for maintaining high-quality harvest…Additionally, it has developed superior grain quality, ensuring that we can compete effectively in both the local and international markets,” said Agriculture Minister, Zulfikar Mustapha.
• The chief scientist at the Guyana Rice Development Board (GRDB), Mahendra Persaud, said after 120 trials, there has been no decline in rice recovery. “We have seen from all those trials the average is around 7.2 tons per hectare, that is around 45 bags per acre. So, in terms of the yield potential, the candidate variety is good,” he added.
• The new variety can withstand late harvesting of 10 to 15 days and endure harsh conditions such as drought, offering hope for improved resilience in the rice sector.
• Mustapha said that within four years, the GRBD has managed to launch two rice varieties with GRDB 16 being introduced to the market in 2020.
• Director General of the Ministry of Agriculture, Madanlall Ramraj, said that varietal development is crucial for increasing rice production in the country, noting that the rice industry is valued at GYD$100Bn (US$478.79Mn), with over GYD$42Bn worth of seed paddy sold to mills last year. He said that exports from mills to other countries amounted to GYD$44Bn, plus billions of dollars more in local sales, drainage, irrigation, and machinery.
• This new variety should help drive further export earnings for Guyana and add to economic growth. For 2024, GRDB has set its entire target of rice production to approximately 710,000 metric tonnes. 

(Sources: Loop Caribbean News & Guyana Ministry of Agriculture)

• The International Monetary Fund (IMF) on Tuesday, October 15, said it sees Mexico's economic growth slowing to around 1.5% this year, citing capacity constraints and tight monetary policy.
• The IMF also sees Mexico’s growth slowing further to 1.3% in 2025, while expecting inflation to close in on the central bank's target of 3%.
• Mexico's central bank, known as Banxico, lowered its benchmark interest rate to 10.50% in a split decision in September. But minutes from the meeting showed that the board members expect easing inflation could allow for further rate cuts.
• "Inflation risks remain on the upside," the IMF said, warning that weaker-than-expected economic growth in the United States, increased global risk aversion and unforeseen effects from recent reforms could weigh on Mexico's output.
• The IMF said that a recent judicial reform creates "important uncertainties about the effectiveness of contract enforcement and the predictability of the rule of law." Mexico's ruling party and allies pushed through the reform last month, arguing it will reduce corruption in the judiciary by implementing the popular election of judges and magistrates.
• Of note, the reform includes reducing the number of Mexican Supreme Court seats from 11 to 9 and limiting justices' tenure to 12 years (instead of the current 15). The reform also includes the Election of Justices and Federal Judges by popular vote, along with a New Judicial Administration Body and New Judicial Discipline Tribunal.

(Sources: Reuters & Mayar Brown LLP)  

• Canada's annual inflation rate slowed more than expected to 1.6% in September, data showed on Tuesday, prompting markets to increase bets of a 50-basis point rate cut next week. The easing of inflation, which was mainly led by a huge drop in the price of gasoline, was the smallest annual increase in consumer prices since February 2021, Statistics Canada said.
• Consumer prices in Canada have consistently eased since the beginning of the year, touching the mid-point of Bank of Canada's 1%-3% target range last month as high interest rates hobbled consumer demand and business investments.
• Analysts polled by Reuters had forecast the inflation rate would cool to 1.8% from 2.0% in August. Month-over-month, the consumer price index decreased 0.4%, compared with a forecast of a 0.2% decline. Excluding gasoline prices, the inflation rate remained at 2.2% in September, Statscan said.
• The central bank's preferred measures of core inflation, CPI-median and CPI-trim, were also unchanged. CPI-median - or the value at the middle of the set of price changes in a month - stayed at 2.3%, and CPI-trim - which excludes the most extreme price changes - remained at 2.4%.

(Source: Reuters)

• China may raise an additional 6 trillion yuan (US$850 billion) from special treasury bonds over three years to stimulate a sagging economy, local media reported a figure that failed to revive sentiment in the country's stock market.
• The Caixin Global report, which cited sources with knowledge of the matter, comes after Finance Minister Lan Foan on Saturday said Beijing will "significantly increase" debt, although the absence of details on the size and timing of the fiscal measures disappointed some investors.
• Data in recent months, including Monday's trade and new lending figures for September, missed expectations, raising concern that China may not reach this year's roughly 5.0% growth target and will struggle to fend off deflationary pressures.
• In late September, authorities unleashed monetary stimulus and property sector support measures. Soon after, a meeting of top Communist Party leaders, the Politburo, vowed the "necessary spending" to bring growth back on track. "The probability of reaching a growth rate of about 5% at least in 2024 and 2025 would increase a lot," Bruce Pang, chief China economist at Jones Lang LaSalle, said of the impact of the reported 6 trillion figure.
• The Caixin article published late on Monday said the funds would be partly used to help local governments resolve their off-the-books debts, according to the sources. The reported amount is equivalent to nearly 5% of China's economic output.
• The International Monetary Fund estimates central government debt at 24% of economic output. But the fund calculates overall public debt, including that of local governments, at about $16 trillion, or 116% of GDP.

(Source: Reuters)