• Recent inflation data point to continued progress toward meeting the U.S. Federal Reserve's 2% inflation goal, but the outlook is now uncertain due to the possibility that new import taxes will drive prices higher, Fed Vice Chair Philip Jefferson said.

• Consumer prices in April rose less than analysts expected, but "there is much uncertainty...around the future path of inflation," Jefferson said in comments prepared for delivery at a New York Fed event.

• Jefferson said he supported holding the policy rate of interest steady at the last Fed meeting, and felt the current "moderately restrictive" level, in the range of 4.25% to 4.5%, was "well positioned to respond to developments that may arise." He regarded the labour market as still "solid," and felt that the slight contraction in U.S. economic output over the first three months of the year was distorted by import data that overstated the degree to which the economy was slowing.

• Still, Jefferson said, sentiment among businesses and households has declined, and he was "watching very carefully for signs of weakening economic activity in hard data." He does expect economic growth to slow over the year, but to remain positive.

• The steady flow of tariff announcements from the Trump administration, driving import levies to record heights only to see the most aggressive actions postponed, has left the Fed struggling to determine the ultimate impact on prices, growth and employment. For now, policymakers say they are on standby as trade and other policy changes are finalised and their effect on the economy can be studied.

(Source: Reuters)

• Japan's wholesale inflation hit 4.0% in April as companies continued to pass on rising raw material and labour costs, underscoring price pressure that will likely keep the central bank on course to raise interest rates further.

• There was little impact seen from U.S. President Donald's sweeping tariffs announced on April 2, in part due to a 90-day pause set by Washington, with many firms yet to finalise their pricing strategy, a Bank of Japan (BOJ) official said in a briefing on the data released on Wednesday.

• The year-on-year increase in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, matched a median market forecast and slowed from a revised 4.3% annual increase in March.

• The index, at 126.3, hit a fresh record high for the 8th straight month, in a sign that lingering inflationary pressures are feeding into higher consumer prices with some lag. The yen-based import price index fell 7.2% in April from a year earlier after a revised 2.4% drop in March, a sign the currency's rebound was taking pressure off import costs.

• Food and beverage prices rose 3.6% in April from a year earlier, faster than a 3.4% gain in March. Agricultural goods prices also spiked 42.2% in April after a 39.1% rise in the previous month.

• The BOJ ended a decade-long, massive stimulus last year and raised short-term interest rates to 0.5% in January. While it has signalled readiness to raise rates further, the economic fallout from Trump's tariffs has complicated its decision on the next rate-hike timing. Core consumer inflation, which is the key indicator the BOJ uses to set monetary policy, hit 3.2% in March on persistent rises in food costs, staying above the central bank's 2% target for three years.

(Source: Reuters)

• TransJamaican Highway Limited (TJH) reported a 31.1% increase in its net profits for the quarter ending March 31, 2025 (Q1 2025) to US$9.07Mn.
• The growth in earnings was fueled by a 13.8% year-on-year increase in revenues and a 9.5% reduction in operating expenses, which was partially offset by a 29.9% decline in other income to US$0.9Bn. Strong revenue performance from the company's main operations, i.e. toll collections, led to the overall improvement in its topline performance, while the decline in other income was due to lower interest income, as the Group reduced investment activity to reserve funds for planned initiatives scheduled for the first half of 2025.
• Despite an increase in administrative expenses (7.1%), operating profit benefited from a reduction in operating expenses (-9.5%). Higher salary adjustments and increased travel expenses, linked to renewed contracts for operational team transportation, accounted for the rise in admin expenses. In contrast, lower amortisation of the Intangible Asset and a decline in repairs and maintenance activities carried out in the first quarter contributed to the reduction in operating expenses. That said, this was partially offset by higher marketing expenses and bank charges as TJH increased its marketing spend to support the expanded T-Tag and other campaigns, as well as higher bank charges.
• Against this background, operating profit amounted to US$15.42, a 21.9% increase over the period, resulting in a 456 basis point (bps) improvement in operating margins to 68.5%.
• Additionally, financing costs for the company fell (-4.9%), aligning with the gradual decline in interest expenses, as principal repayments on secured notes continue to be paid on a quarterly basis. Consequently, on the back of higher revenues and lower operating and financing expenses for the quarter ended March 31, 2025, TJH’s net profit margin rose to 40.3% from m34.9% in the previous corresponding quarter.
• At market close on Tuesday, TJH’s JMD stock price was J$3.67, down 20.7% since the start of the year. At its current price, the company trades at a P/E of 9.1x, below the average of 15.5x for the Main Market Energy, Industrials and Materials Sector.

(Sources: TJH Financial Release & NCBCM Research)

• While the Jamaican economy is estimated to have contracted by 0.5% in 2024, according to Fitch Solutions, expectations are for the country to grow by 1.0% in 2025, with sluggish external demand offset by steady domestic demand amid the continued economic recovery from Hurricane Beryl.
• Favourable domestic economic conditions influence the growth outlook, including a record-low unemployment rate of 3.5% in the fourth quarter of 2024 (Q4 2024) and 3.7% in Q1 2025, well anchored inflation rates within the BOJ’s target range, and an expected 6.7% minimum wage increase and rise in the income tax threshold from J$1.7Mn to J$1.8Mn in April 2025 that will help to boost disposable income.
• While domestic demand will help growth recover in 2025, Jamaica remains vulnerable to external shocks and challenging global economic conditions. These external factors include flagging U.S. demand, a challenging trade policy environment following Trump’s tariff announcement, and a potentially damaging hurricane season in 2025.
• Concerning the U.S., Fitch anticipates that it will fall into a modest recession over the second half of 2025 (H2 2025), which will have meaningful implications for Jamaica. The U.S. accounted for 47.2% of Jamaica’s total exports in 2023 and 40.9% of total imports. A slowing US economy will, therefore, impact remittances to Jamaica, which made up 18.5% of GDP in 2023 and an estimated 16.9% in 2024.  
• Additionally, slowing economic activity in the U.S. will impact investment levels in Jamaica, as evidenced by sharp declines in foreign direct investment inflows in 2024.

(Sources: Fitch Connect)

• A lower interest burden and a reversal of one-time expenditures will see Costa Rica’s budget deficit narrow from 3.8% of GDP in 2024 to 3.3% in 2025 and further drop to 3.1% in 2026.
• Fitch Solutions expects this to bring the primary surplus to 1.5% of GDP compared to 1.1% in 2024, and just above the government’s target of 1.3%.
• In 2024, expenditure growth (6.3%) outpaced revenue growth (3.2%), largely due to a one-off COVID-19-related expense tied to vaccine procurement agreements. This should cause spending to ease in 2025, with expenditures expected to fall to 18.4% of GDP (relative to 18.9% in 2024).
• The public employment reform law, which standardises salary structures and eliminates discretionary bonuses, will also help reduce the public wage bill, historically one of the largest components of spending.
• Revenue growth will, however, remain relatively flat at 14.9% of GDP in 2025 relative to the 15.1% of GDP in 2024, as political gridlock between the executive and legislators continues to block structural tax reforms.
• Nevertheless, an increased primary surplus will help reduce the debt-to-GDP ratio from 59.8% in 2024 to 59.5% in 2025, supported by adherence to the fiscal rule. Looking ahead, the debt-to-GDP ratio is also expected to continue on a downward path.

(Source: Fitch Connect)

• Panama’s real GDP growth is expected to come in at 2.6% in 2025, slightly below 2024’s estimated outturn of 2.8%. Growth will be supported by a return to more normal water levels in the Panama Canal (which accounts for roughly 7.5% of GDP) after several years of reduced throughput due to drought.
• An upward revision to the projections would have been on the cards given solid incoming data; however, those prints largely predate the aggressive shifts in U.S. trade policy seen since March 2025 and the deterioration in foreign relations between the U.S. government and the Mulino administration over President Donald Trump’s insistence that the Panama Canal be either returned to U.S. hands or that appropriate compensation should be paid.
• Panama is not particularly exposed to the direct effect of tariffs, given that goods exports account for a small share of GDP. Nonetheless, its status as a major logistics hub does leave it more vulnerable to the knock-on consequences of tariffs on goods trade, but the impact will be masked in 2025 by a surge in global trade over H1 2025 as firms race to front-run tariffs.
• As a result, the primary impact on growth in the near term will be a drop in business confidence, exacerbated by persistent concerns that the Trump administration may impose financial sanctions of some sort, which Panama is highly exposed to as a dollarised economy, in response to Mulino’s reluctance to hand back control of the Canal.
• Further, two domestic headwinds will add to the existing pain. First, the government’s aggressive fiscal consolidation plans, which will likely take the form of spending cuts, will likely see public investment set to bear the brunt. Second, a national strike that began in mid-to-late April in response to the government’s social security reforms will weigh heavily on economic activity in Q2 2025, with the Chamber of Commerce estimating that the stoppages are coming at a daily cost to the economy of around US$100Mn (approx. 0.1% of GDP).

(Source: Fitch Connect)

• U.S. consumer prices rebounded moderately in April as declining food costs partially offset rising rents, leading to the smallest annual increase in four years, but the inflation outlook remains unclear against the backdrop of tariffs.
• The rise in prices reported by the Labour Department's Bureau of Labour Statistics on Tuesday, May 13, 2025, was below economists' expectations and showed little impact from President Donald Trump's sweeping import duties, whose impact economists expected to become evident by the middle of this year.
• The Consumer Price Index (CPI) increased 0.2% last month after dipping 0.1% in March, which was the first decline since May 2020, the Labour Department said. Economists polled by Reuters had forecast that the CPI would rise 0.3%.
• Shelter, which includes rents, rose 0.3% and accounted for more than half of the increase in the CPI. That said, that jump following a 0.2% gain in March was partially offset by a 0.1% decline in food prices, which followed a 0.4% acceleration in March. Furthermore, grocery store prices decreased 0.4%, the largest decline since September 2020, pulled down by a 12.7% drop in the cost of eggs, the biggest drop since 1984.
• The data suggested price pressures were cooling before Trump's tariffs policy, but did not change economists' views that the Federal Reserve would continue to pause its interest rate-cutting cycle until late in the summer.
• Though the U.S. and China took a major step towards de-escalating their trade war over the weekend with a 90-day truce, a 10% blanket duty on almost all imports remains in place. Sectoral tariffs also continue to be levied. "Improvements in global trade will provide some clarity on the future path of inflation," said Jeffrey Roach, chief economist at LPL Financial.

 (Source: Reuters)

• U.S. President Donald Trump signed a wide-reaching executive order on Monday, May 12, 2025, directing drugmakers to lower the prices of their medicines to align with what other countries pay, which analysts and legal experts said would be difficult to implement.
• The order gives drugmakers price targets in the next 30 days and will take further action to lower prices if those companies do not make "significant progress" towards those goals within six months of the order being signed.
• Trump told a press conference that the government would impose tariffs on companies if the prices in the U.S. did not match those in other countries and said he was seeking cuts of between 59% and 90%.
• The United States pays the highest prices for prescription drugs, often nearly three times more than other developed nations. Trump tried in his first term to bring the United States in line with other countries but was blocked by the courts.
• Trump's drug pricing proposal comes as the president has sought to fulfil a campaign promise of tackling inflation and lowering prices for a host of everyday items for Americans, from eggs to the gas pump. He noted his order on drug prices was partly a result of a conversation with an unnamed friend who told the president he got a weight loss injection for $88 in London and that the same injection in the U.S. cost $1,300.
• If drugmakers do not meet the government’s expectations, it will use rulemaking to bring drug prices to international levels and consider a range of other measures, including importing medicines from other developed nations and implementing export restrictions, a copy of the order showed.

(Source: Reuters)

• Tropical Mobility, a majority-held subsidiary of Tropical Battery Company, recently announced a partnership with Snap-on to distribute the group’s Total Shop Solutions brands in Jamaica, including Hofmann, Challenger Lifts, Ecotechnics, and Pro-Cut.
• Snap-on is a leading global developer, manufacturer, and marketer of tool and equipment solutions for professional technicians. Snap-on Incorporated is a USD$3.7Bn, S&P 500 Company with product lines that include high-quality hand tools, tool storage solutions, diagnostic equipment, management systems, and “under-car” shop implements.
• The partnership with Snap-on perfectly aligns with Tropical Mobility’s growth and diversification strategy in the automotive sector.
• Under the agreement with Snap-on, Tropical Mobility provides sales and service on a wide range of automotive lifts, wheel aligners and wheel balancers, tire removal equipment, brake disc skimming lathes, and air conditioning service equipment.
• This partnership comes less than a month after the company’s announcement of a signed Memorandum of Understanding with Zero Emisión RD to Service Tesla Electric Vehicles in Jamaica.

 (Sources: JIS)

• Mexico's annual inflation rate came in line with market expectations in April, accelerating from the previous month but still within the central bank's target range. That should allow the Bank of Mexico to keep lowering borrowing costs in Latin America's second-largest economy, which faces a weakening trend amid mounting global trade uncertainties.
• Consumer prices in Mexico rose 3.93% in the year through April, according to national statistics agency INEGI, roughly in line with economists' forecasts in a Reuters poll and up from 3.8% the previous month.
• Mexico's central bank, also known as Banxico, has an inflation target of 3%, plus or minus a percentage point. In March, it cut its interest rate by 50 basis points for the second consecutive time to 9%, the lowest since September 2022, and policymakers have signalled that further easing should come if inflation holds steady as expected. The central bank's next decision is scheduled for May 15.
• JPMorgan economist Gabriel Lozano said that Banxico is widely expected to keep the 50-basis-point easing pace, noting that although the impact of U.S. tariffs brings downside risks to growth, inflation has not substantially improved. In April alone, consumer prices in Mexico rose 0.33%, while the closely watched core index, which strips out some volatile food and energy prices, rose 0.49%. Both were in line with market forecasts.
• The 12-month core index stood at 3.93%, up from 3.64% in March, with core inflation driving the overall index up.

(Source: Reuters)