• The Bank of Mexico raised its key interest rate by an expected 50 basis points to a record 10.50% on Thursday, tempering its monetary tightening pace amid a slowdown in inflation while suggesting it could hike rates at least one more time.
• The split decision follows four consecutive 75-basis-point hikes and comes after the U.S. Federal Reserve raised its key interest rate by 50 basis points Wednesday after four consecutive hikes of its own of three-quarters of a percentage point.
• "The board considers it will still be necessary to raise the reference rate in its next monetary policy meeting," said Banxico, as the Mexican central bank is known. "Subsequently, it will assess if the reference rate needs to be further adjusted as well as the pace of adjustments based on the prevailing conditions," it added.
• Mexico's headline inflation in November slowed to 7.8%, its lowest level since May. However, annual core inflation, which strips out some volatile food and energy prices, rose to 8.51%, foreboding more monetary policy tightening as Banxico works to get inflation to its target of 3%, plus or minus one percentage point.
• Banxico has now raised its benchmark by 650 basis points since June 2021.

(Source: Reuters)

• Brazil's central bank already believes a recently proposed spending package is partly affecting closely watched inflation expectations, said the bank's chief Roberto Campos Neto. Notably, policymakers have highlighted inflationary risks arising from leftist President-elect Luiz Inacio Lula da Silva's 168Bn reais ($31.5Bn) spending proposal to meet his campaign promises. 
• For its current inflation projections, Neto noted that the central bank has considered a fiscal expansion of 130Bn reais next year extracted from market estimates. Notably, the central bank held interest rates at 13.75% this month, after a September pause to an aggressive tightening that lifted rates from a 2% record low in March 2021 to battle inflation.
• Faced with expected pressure on the public debt due to booming expenses, economists have taken a more conservative stance on when rate cuts would begin in Latin America's largest economy, with some predicting hikes to be even resumed next year.
• However, Neto pointed out that coordination between fiscal and monetary policies is "very important," and the central bank needs proper conditions to lower rates.
• He also said that returns to sizeable subsidized credit would negatively impact the neutral interest rate and reduce monetary policy power, praising the long-term rate as an "institutional gain" that helped the capital markets expansion. The long-term rate was implemented in 2018 to bring the cost of state-run development bank BNDES lending rates in line with those of the market. The government transition team recently said it is too high and should be reformed.

(Source: Reuters)

• The European Central Bank eased the pace of its interest rate hikes on Thursday but stressed significant tightening remained ahead and laid out plans to drain cash from the financial system as part of a dogged fight against runaway inflation.
• After being wrong-footed by sudden price rises, the ECB has been raising rates at an unprecedented pace. Inflation has soared since economies reopened after the COVID-19 pandemic, driven by supply bottlenecks and then surging energy costs following Russia's invasion of Ukraine.
• In a move shadowing similar steps this week by the Federal Reserve and Bank of England, it raised the rate it pays on bank deposits by 50 basis points to 2%, moving further away from a decade of ultra-easy policy. That decision, which was expected, marked a slowdown in the pace of tightening from 75-basis-point increases at each of the ECB's two previous meetings, as price pressures show some signs of peaking and a recession looms.
• But to secure a majority for that slowdown, ECB President Christine Lagarde had to offer dissenters a pledge that rates will be increased again, potentially as many as three times, by the same amount. Money markets immediately moved to price in a peak deposit rate of just over 3% by July, compared to 2.75% before the meeting. The ECB is pushing hard to persuade investors of its commitment to fighting higher prices after lagging the Fed and BoE in raising rates.
• The ECB's new projections on Thursday showed inflation above the ECB's 2% target through 2025. ECB President Christine Lagarde said inflation may still come in higher than that, citing the possibility of a bout of stronger-than-expected wage growth and of a boost to demand from government support measures across the 19 eurozone countries.

(Source: Reuters)

• China’s reopening could bring opportunities as well as risks to its economy, Albert Park, chief economist at the Asian Development Bank told CNBC. Although the lifting of COVID restrictions in China would boost growth prospects for the country and other economies, it could also lead to an increase in COVID-19 cases.
• There could be “waves in different parts of the country at different times,” Park said. “And there’ll be a strong temptation by the government to reimpose controls or step back. That could be very disruptive for economic activity.” But that is the price the government would have to pay if it wants the country to open up and transition back to life without the zero-Covid policy, he added.
• This week, ADB downgraded its 2022 growth forecast for China to 3% from its previous projection of 3.3%. It also predicted China’s economy would grow by 4.3% in 2023, downgrading its September growth estimates of 4.5%.
• Recurring lockdowns in China are one of the three big headwinds that are slowing down the region’s recovery from the pandemic, according to ADB. Monetary policy tightening by central banks around the world and the prolonged Russia-Ukraine war are factors contributing to slower growth as well, the bank said.

(Source: CNBC)

• Massy Holdings Ltd. advised that on December 7, 2022, its Board of Directors approved the acquisition of Rowe’s IGA Supermarkets by Massy Stores (USA) LLC, a wholly-owned subsidiary of the Company. Rowe’s IGA was established in 2005 and is a well-recognised brand within the Jacksonville area.
• Massy Stores USA entered into a Membership Interest Purchase Agreement with the sole owner of Rowe’s IGA, Robert A. Rowe, to purchase 100% of the equity interest of each of the seven limited liability companies within Rowe’s IGA Group for US$47Mn. The acquisition was completed simultaneously on December 12, 2022.
• The acquisition of Rowe’s IGA, an independent supermarket chain with seven stores in Jacksonville, Florida, is aligned with the Massy Integrated Retail Portfolio’s strategy to expand its retail footprint in the US market.
• The acquisition will represent a 1% increase in the Massy Group’s assets and is expected to contribute to an increase in the Group’s profit before tax of approximately 4% for FY2022/23. For the Integrated Retail Portfolio, the acquisition is expected to increase its profit before tax by 7%.

(Source: JSE)

• The Inter-American Development Bank (IDB) approved a US$97Mn loan to strengthen Guyana’s healthcare network – the first operation under a conditional credit line for investment projects (CCLIP). According to the IDB, the overall objective of the CCLIP, which will include multiple loans, is to improve access, quality, and efficiency of health services in the country.
• The programme is expected to expand the capacity of seven hospitals (four hinterland hospitals in Regions one, seven, eight and nine, Linden Hospital, New Amsterdam Hospital, and Georgetown Public Hospital) and extend the coverage of diagnostic exams and medical consultations.
• It will also increase the efficiency of the public health system by supporting improvements in logistics, management, and processes. Infrastructure upgrades include more efficient use of water and energy as well as accessibility provisions for disabled persons.
• As part of the investment project activities, the CCLIP will also finance Guyana’s plans for a digital transformation in health, including the expansion of the teleradiology and teleophthalmology networks. Finally, it will strengthen supply chain management, improve the provision of maternal and child health, and contribute to pandemic and emergency preparedness, among other activities.
• This programme included a gender and diversity assessment to identify and address health disparities by gender, ethnicity, and disability status. In addition, it contributes to climate change mitigation and adaptation by financing health infrastructure that is environmentally sustainable and resilient to climate change.

(Source: Guyana Chronicles)

• Antigua’s redeveloped Deep Water Harbour port will help Antigua and Barbuda achieve its goal of becoming an Eastern Caribbean transhipment hub. Prime Minister Gaston Browne stated that the facility is the sole container terminal port in the OECS, allowing it to provide services to neighbouring nations.
• The Chinese construction giant China Civil Engineering Construction Corporation redeveloped the port for $90Mn. The work began in 2018 but was plagued by delays due to the COVID epidemic.
• Of note, with the holiday season in full swing, port officials have implemented several measures to accommodate the typical increase in traffic. “So far, we have seen the ability to prepare the cargo and get it ready, which has advanced availability and increased our ability to deliver,” Telemaque noted.
• The port currently features a brand-new cruise berth, cargo and logistics facilities, and more amenities. Additionally, offices have been constructed to house Customs and Excise, the Plant Protection Unit, Immigration, and other services to prevent consumers from having to travel to and from St. John’s.

(Source: Caribbean News Now)

• The Federal Reserve raised interest rates by half a percentage point on Wednesday and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023 as well as a rise in unemployment and a near stalling of economic growth.
• The Fed's latest quarterly summary of economic projections shows U.S. central bankers see the policy rate, now in the 4.25%-4.5% range after Wednesday's 50-basis-point increase, at 5.1% by the end of next year, according to the median estimate of all 19 Fed policymakers.
• The Federal Reserve will deliver more interest rate hikes next year even as the economy slips towards a possible recession, Fed Chair Jerome Powell said on Wednesday, arguing that a higher cost would be paid if the U.S. central bank does not get a firmer grip on inflation.
• Policymakers expect their interest-rate hikes to push the unemployment rate, now at 3.7%, to 4.6% in the final quarter of 2023 and stay there through 2024.
• Further, Fed policymakers have become more pessimistic about the outlook for economic growth, with a median projection for GDP growth next year of 0.5%, versus September's expectation of 1.2%.

(Source: Reuters)

• Britain’s economy returned to growth in October as activity bounced back from the impact of the additional bank holiday for the Queen’s funeral, however, a long recession is still expected. The Office for National Statistics said gross domestic product (GDP) rose by 0.5% in the month, after a decline of 0.6% in September when many businesses closed their doors during the national mourning period.
• However, GDP shrank by 0.3% in the three months to October, reflecting concerns over the strength of the economy as consumers and businesses tightened their belts amid the highest rates of inflation for 41 years.
• The Bank of England said last month the economy was probably already in a recession that could last until the end of 2023 after GDP fell by 0.2% in the three months to September. Despite a recovery in October, a return to contraction in November and December could spell a second consecutive quarter of decline – the technical definition of a recession.
• With inflation above 11% during Russia’s war in Ukraine driving up energy costs, the Bank of England is widely expected to further raise interest rates on Thursday for the ninth time in a row. However, the rate-setting monetary policy committee is expected to be split, with a minority of its nine members likely to push for a slower pace of rate increases amid the risk of a lengthy recession.
• Jeremy Hunt, the chancellor, said high inflation was slowing economic growth across the world, and the International Monetary Fund had forecast a third of the world economy will be in recession this year or next.

(Source: The Guardian

• Jamaica Broilers Group (JBG) reported a net profit of $1.91Bn for its six months ended October 29, 2022, representing a 119.3% increase relative to last year. This performance was mainly attributed to strong revenue growth, though losses from discontinued operations tempered bottom-line growth. Net profit from continuing operations for H1 amounted to $3.02Bn, 220.0% higher than the corresponding period of 2021.
• Over the six months, JBG revenues increased by $10.76Bn or 30.7% to $45.84Mn. This revenue growth was primarily driven by increased production and sale of poultry, as well as the increased sale of baby chicks to small farmers. The reopening of the Jamaican economy, particularly the tourism industry, also contributed to the increased demand that drove sales.
• However, the company’s cost of sales has increased by 24.9% to $34.75Mn, which weighed on its gross profit margin, declining from 79.3% in H1 2021 to 75.8% in H1 2022. However, its operating profit margin improved to 9.7% from 4.9%, highlighting increased operating cost efficiency.
• Going forward, the company is expected to see both revenue and net profit growth for the coming quarters, as it benefits from the Christmas season demand and increased tourist arrivals influencing demand for its products.
• JBG’s stock price has decreased by 0.15% since the start of the calendar year. The stock closed Monday’s trading session at $28.99 and currently trades at a P/E of 8.3x, which is below the Main Market Distribution & Manufacturing Average of 15.4x.

(Sources: JSE and NCBCM Research)