• Mexican Pemex crude oil production is down some 20,000 barrels per day (Bpd) following a fire at an offshore platform on Saturday, April 6, that left several injured and at least one dead, a source at the state energy company said.
• While the reduction amounts to a 1% decrease, a prolonged outage would further dent already falling crude oil production that hit its lowest level in 45 years in February.
• According to anonymous sources, the Akal-B platform in the Gulf of Mexico was still out of service on Tuesday as workers sought to restore operations.
• The company has not provided updates on the fire since Sunday, when it reported that it was carrying out an inspection and evaluating the causes of the fire "to reestablish operations at the processing centre."
• Pemex puts its current production of oil and condensate at 1.8 million bpd, of which 1.5 million is crude oil, the lowest level in 45 years.
• In recent years, the oil company has recorded several fatal accidents at its offshore facilities, which some experts attribute to a lack of investment in key maintenance. Pemex has repeatedly denied this.

 (Source: Reuters)

• The third time is not the charm. March’s higher-than-expected inflation number, announced on Wednesday, follows hot prints in January and February and kills off the prospects the Federal Reserve will lower borrowing costs in June. The central bank has hinted at three small rate cuts this year; however, economic data and political tensions may force it into fewer, but bigger, reductions.
• Fed Chair Jerome Powell had said the previous two pieces of inflation data might have been “bumps in the road”, but the current figures suggest bigger issues are afoot. The Consumer Price Index rose at an annual rate of 3.5% in March, faster than the 3.2% recorded in February, due to higher gasoline, rent and food costs. Although the Fed targets a different inflation yardstick that has been undershooting CPI, the pace of price growth is well above its 2% goal.
• The Fed indicated it may make three cuts this year, of 25 basis points each, to bring rates from the current 5.25% to 5.5% range to around 4.5% to 4.75%. However, if Powell doesn’t start cutting in June, his window will get narrower.
• Notably, while Powell may choose not the wade in the hot political waters, fewer bigger cuts are risky. Two 50-basis point reductions would bring rates below the level forecast by the Fed last month, increasing the chances of a pickup in inflation. Keeping rates higher through 2024 could curb economic growth and even cause a recession. Still, if economic data and political realities block the road to lower rates, Powell may be tempted to take a shortcut and enact fewer bigger cuts.
• The Fed meets at the end of July, but derivatives prices suggest traders believe the September meeting is more likely to kickstart easier monetary policy, according to LSEG.

(Source: Reuters)

• The European Central Bank is all but certain to keep borrowing costs at a record high on Thursday but is likely to signal that a rate cut could come as soon as June, given a sharp slowdown in inflation and continued economic weakness.
• The ECB has kept interest rates steady since September but has already signalled that cuts are coming into view, with policymakers awaiting a few more comforting wage indicators before pulling the trigger.
• The only complication could be if the U.S. Federal Reserve delayed its own policy easing, although even that might slow but not stop the ECB given a widening performance gap in the world's biggest economy and the 20-country Eurozone.
• The Eurozone is now in its sixth straight quarter of economic stagnation and the labour market is starting to soften. Meanwhile, the U.S. economy continues to grow above trend, its labour market remains tight and inflation rose more than expected last month, raising the risk of price growth getting stuck.
• Policymakers have pointed to a June cut in the 4% deposit rate so often that investors consider it an effective pre-commitment and any walking back would risk damaging the ECB's credibility.
• However, ECB President Christine Lagarde is likely to avoid any talk of what happens beyond June, especially as there is little consensus yet on how far and fast interest rates need to fall. Markets have priced in 80 basis points of cuts this year, or between three and four moves, but these expectations have moved in a wide range.

(Source: Reuters)

• In its recent statement, the Bank of Jamaica (BOJ) defends its actions taken in December 2021 to suspend the cambio and remittance operating licence of then Alliance Financial Services Limited (AFSL), an Alliance Investment Management Limited (AIML) - affiliated company. This notice comes following the Court’s ruling to dismiss the Bank’s charges against AIML.
• In addition to the suspension, the BOJ’s actions included the revocation of the authorisation granted to AFSL to operate in the Bank of Jamaica Fintech Regulatory Sandbox as a payment service provider, effective 3 December 2021.
• As stated at the time, the Bank says regulatory actions became necessary after the Financial Investigations Division (FID) charged AFSL’s principals and two AFSL-affiliated companies at the time (AIML and Alliance Finance Limited (AFL)) with several offenses under the Bank of Jamaica Act and the Banking Services Act.
• Bank of Jamaica maintains that its actions were necessary as the allegations at the time threatened the good order in the foreign exchange market and payment systems as well as the reputation and good standing of the Jamaican financial system internationally.
• It further noted that Alliance’s divestment of business was a strategy and activity pursued by the principals of Alliance as their own business decision and that the Bank of Jamaica had no part in that decision or transaction.

(Source: BOJ)

• Eppley has announced the appointment of Raymond Donaldson as the Chief Executive Officer, effective May 3, 2024.
• Jeffrey Brown will also join Eppley on May 3, 2024, as Chief Investment Officer and will work closely with Denise Gallimore, Vice President of Real Estate, and Samantha Summerbell, Assistant Vice President of Credit, to grow and expand Eppley’s investment efforts.
• Justin Nam has resigned as Eppley’s General Manager to pursue other interests after nearly a decade at the company. His resignation is effective May 31, 2024, and he will coordinate with Raymond and Jeffrey to facilitate a smooth transition.
• Raymond Donaldson has a 20-year career in banking and finance in Jamaica, the Bahamas, and the wider Caribbean. Most recently, Mr. Donaldson was Vice President of Corporate and Commercial Banking at National Commercial Bank. Prior to that, Mr. Donaldson served as Director of Corporate and Investment Banking in the Bahamas and Turks and Caicos at CIBC FirstCaribbean.
• Jeffrey Brown has held executive roles in banking in Jamaica and Barbados, mostly recently as Head of Loan Structuring and Syndications at National Commercial Bank and previously at CIBC FirstCaribbean, Scotiabank, and PricewaterhouseCoopers (PwC).

(Source: JSE)

• To strengthen its partnership with the Caribbean region, the European Union (EU) will be among the key investment stakeholders to participate in the upcoming Caribbean Investment Forum (CIF) that will be held in Georgetown, Guyana.
• Speaking at the formal launch of the forum last week, Joan Nadal Sastre, Head of Cooperation, Delegation of the European Union to Guyana, said the EU intends to be a “key business partner” with the region to achieve mutual sustainable goals.
• “The European Union wants to do more business with the Caribbean; we want more EU companies to see the Caribbean as an investment opportunity. We want to be a key business partner we have a lot to put on the table,” Sastre said. He noted that while the EU and the Caribbean have long shared a relationship, opportunities for further advancement are abundant.
• The CIF forum, which is slated for July 10 -12 at the Arthur Chung Conference Centre, will focus on a green economy transition, which will generate 400,000 additional high-paying jobs in the Caribbean, harnessing technology for agriculture in countries such as Guyana, Belize, Suriname, Trinidad and Tobago, and Jamaica, to further achieve food security targets. Further, digitalisation and technology will be among the topics to harness innovation to create well-paid jobs in the services sector.
• JoEllen Laryea, Manager of Partnerships, Advocacy and Reporting at the Caribbean Export Development Agency, said that CIF will be a key platform for attracting the right investors to the region.
• She further stressed the need for investment in sectors such as sustainable agriculture, technology innovation, and green economy transition, with a focus on fostering sustainable development and economic transformation in the Caribbean.

(Source: Guyana Chronicle)

• Brazil's consumer price increases are likely to have remained subdued in March, but some services continued to show worrying increases, leading economists to expect quicker disinflation to come from food and other goods, a Reuters poll showed.
• Last month, the annual variation of the headline IPCA index likely dropped closer to the midpoint of the wider official target for 2024 of 3% plus/minus 1.5 percentage points as a previous seasonal jump in education costs faded.
• It is forecast to register a 4.01% yearly rate and a monthly rate of 0.25% in March, against 4.5% and 0.83%, respectively in February, according to median estimates of 23 economists polled over April 3-9.
• "We are noting an expected increase in underlying services (0.50%) that continues to be a source of risk and should only start to slow down from April onwards," said Banco Santander economist Adriano Valladao P. Ribeiro.
• "Despite this, most core inflation measures are expected to improve in March, and in particular, we are projecting an increase of just 0.23% month on month for the average of the five main core readings.", noted Ribeiro.
• Much will also depend on the Brazilian real's resistance to the threat of higher currency volatility and the potential hit on consumer prices after the real fell to its lowest since October last week on growing doubts over future monetary policy.

(Source: Reuters)

• US consumer price index accelerated at a faster-than-expected pace in March, pushing inflation higher and likely dashing hopes that the Federal Reserve will be able to cut interest rates anytime soon.
• The CPI, a broad measure of goods and services costs across the economy, rose 0.4% for the month, putting the 12-month inflation rate at 3.5%, or 0.3 percentage points higher than in February, the Labor Department’s Bureau of Labor Statistics reported Wednesday. Economists surveyed by Dow Jones had been looking for a 0.3% gain and a 3.4% year-over-year level.
• Excluding volatile food and energy components, core CPI also accelerated 0.4% on a monthly basis while rising 3.8% from a year ago, compared with respective estimates for 0.3% and 3.7%.
• Energy rose 1.1% after climbing 2.3% in February, while shelter costs, which make up about one-third of the weighting in the CPI, were higher by 0.4% on the month and up 5.7% from a year ago. Expectations for shelter-related costs to decelerate through the year have been central to the Fed’s thesis that inflation will cool enough to allow for interest rate cuts.
• Increasing inflation was also bad news for workers, as real average hourly earnings were flat on the month and increased just 0.6% over the past year, according to a separate BLS release. The report comes with markets on edge and Fed officials expressing caution about the near-term direction for monetary policy. Central bank policymakers have repeatedly called for patience on cutting rates, saying they have not seen enough evidence that inflation is on a solid path back to their 2% annual goal. The March report likely confirmed worries that inflation is stickier than expected.
• Markets had expected the Fed to start cutting interest rates in June, with three reductions in total expected this year, but that shifted dramatically following the release. Traders in the fed funds futures market pushed expectations for the first cut out to September, according to CME Group calculations.
• Multiple Fed officials in recent days have expressed skepticism about lowering rates. Atlanta Fed President Raphael Bostic told CNBC that he expects just one cut this year, likely not coming until the fourth quarter. Governor Michelle Bowman said an increase may even be necessary if the data does not cooperate. Further, Liz Ann Sonders, chief investment strategist at Charles Schwab opined that “There’s not much you can point to that this is going to result in a shift away from the hawkish bent” from Fed officials. As such, in her view, a June cut is “definitively off the table.”

 (Source: CNBC)

• The NFIB's Small Business Optimism Index reaching its lowest level in over a decade signals significant concerns among small-business owners. This decline reflects a combination of factors impacting the economic landscape, including inflationary pressures and uncertainties surrounding market conditions.
• The report highlights a notable uptick in worries about inflation among small-business owners. With 25% of respondents citing it as their primary concern, this reflects the tangible impact of escalating input costs and rising wages on businesses' bottom lines. The consequent increase in average selling prices underscores the efforts of businesses to offset these inflationary pressures.
• Despite broader job growth in March, small businesses are facing challenges in recruitment. This is particularly evident in sectors such as transportation, construction, and services, where there is a pronounced scarcity of both skilled and unskilled labour. This shortage not only impedes business operations but also suggests potential constraints on further economic expansion.
• The persistently high inflation, which exceeds the Federal Reserve's target, raises questions about the central bank's response. There are anticipations that the Fed may opt to lower interest rates to counteract inflationary pressures and support economic stability. However, the timing and extent of such measures remain uncertain, leaving businesses in a state of flux as they navigate evolving monetary policies and economic conditions.

(Source: Reuters)

• Tourism Minister, Hon. Edmund Bartlett, has emphasised the importance of Jamaica’s Tourism Strategy and Action Plan (TSAP) in generating the stakeholder capacity to respond to the industry’s new architecture.
• He was speaking during the opening session of the Tourism Strategy and Action Plan Consultation Workshop for Kingston and St. Andrew, at the Spanish Court Hotel in New Kingston on Thursday (April 4).
• The TSAP, being executed through a partnership with the Inter-American Development Bank (IDB), is geared towards boosting socio-economic development and investment, building the local tourism industry’s resilience to climate change and reducing the sector’s contribution to climate change. It also aims to diversify Jamaica’s inbound tourism and promote the industry’s knowledge-based and technology-enabled development.
• Bartlett also highlighted the TSAP’s importance in making tourism more inclusive and more of an enabler of economic growth and development in Jamaica. He underscored the need to increase local production, which is critical in enabling Jamaica to retain a larger ratio of tourist dollars.
• Notably, with the tourism industry having already welcomed over 1 million visitors within the first two months of the year, it is progressing towards its ambitious goal of welcoming 5 million visitors and generating $5 billion in earnings by 2025.

(Sources: JIS and NCBCM Research)