• The European Central Bank (ECB) cut interest rates on Thursday and kept the door open to further policy easing as concerns over lacklustre economic growth supersede worries about persistent inflation.
• It was the fifth ECB rate cut since June and markets expect two or three more this year, driven by arguments that the biggest inflation surge in generations is nearly defeated, and the flagging economy needs relief.
• The ECB reaffirmed disinflation was "well on track" and welcomed slower growth in wages, which should help bring down inflation in the domestically focused part of the economy.
• With the euro zone economy stagnating in the last quarter due to an industrial recession and weak consumption, the ECB is seen sticking to its easing path even after the U.S. Federal Reserve kept rates unchanged and hinted at a lengthy pause.
• Inflation, which rose to 2.4% in December, could still take a few months to ease back to the ECB's 2% goal but there is little to challenge the narrative that all is on track.
• Wage growth is easing, the labour market is softening, oil prices have come off early-year highs and the dollar's relentless firming seems to have stopped for now.

(Source: Reuters)

• U.S. economic growth slowed in the fourth quarter as a strike at Boeing, contributed to depressing business investment, but robust consumer spending probably keeps the Federal Reserve on a slow interest rate cut path this year.
• Gross domestic product increased at a 2.3% annualised rate last quarter after accelerating at a 3.1% pace in the July-September quarter, the Commerce Department's Bureau of Economic Analysis said in its advance GDP estimate.
• The moderation in growth last quarter reported by the Commerce Department on Thursday was also because inventories at businesses were run down, underscoring the strong domestic demand.
• Furthermore, inflation warmed up last quarter, with the personal consumption expenditures (PCE) price index, excluding food and energy, rising at a 2.5% rate compared to a 2.2% pace in the third quarter.
• Additionally, the Fed on Wednesday left its benchmark overnight interest rate in the 4.25%-4.50% range, having reduced it by 100 basis points since September. It has forecast only two rate cuts this year, down from the four it had projected in September, when it embarked on its policy easing cycle.
• That reflected uncertainty about the economic impact of fiscal, trade and immigration policies from the new Trump administration. Economists view the planned tax cuts, broad tariffs on imports and mass deportations of undocumented immigrants as inflationary. They expect economic growth to falter by the second half and inflation to rise.

(Source: Reuters)

• Jamaica’s tourism sector is poised for a significant boost with the announcement of two key airlift expansions targeting European markets. Edelweiss Air, a Swiss leisure carrier, will introduce a second weekly flight from Zurich to Montego Bay starting in winter 2025, adding to its existing Thursday service with a new Monday rotation.
• This development follows the recent unveiling of weekly non-stop flights from Lisbon, Portugal, to Montego Bay by World2Fly, the travel arm of the Iberostar Group, which is set to launch in the summer of 2025.
• Minister of Tourism, Hon. Edmund Bartlett, welcomed the Edelweiss expansion during the 45th International Tourism Fair (FITUR) in Madrid, Spain. “Edelweiss Air’s new flight will primarily cater to the Swiss traveler and create opportunities for the luxury market, aligning with Jamaica’s push to promote high-end tourism offerings. The additional airlift represents 3,500 new seats, increasing Edelweiss’ total capacity to 7,000 for winter 2025/2026,” Bartlett highlighted.
• This announcement builds on the excitement surrounding the Lisbon-Montego Bay flights from World2Fly, which are already showing strong demand with 50% occupancy months ahead of the scheduled launch. Operated by the state-of-the-art Airbus A350, with a capacity of approximately 432 passengers, the new service highlights Jamaica’s growing appeal among European travelers.
• Both airlift expansions are strategic moves to deepen Jamaica’s connection to European markets, enhance accessibility, and attract luxury and leisure travelers. These developments signify Jamaica’s commitment to expanding its global reach and delivering unparalleled travel experiences to meet rising demand. Furthermore, these developments position Jamaica to attract a broader range of visitors, further strengthening its tourism-driven economy.

(Source: Caribbean National Weekly)

• Mexico’s economy posted the first quarterly contraction since 2021, shrinking much more than expected on weaker domestic demand and uncertainty over tariffs by the US, the country’s top trade partner.
• Gross domestic product fell 0.6% in the fourth quarter, more than all forecasts in a Bloomberg survey of economists that had a -0.2% median estimate. From a year ago, GDP expanded 0.6%, below the 1% median projection, according to preliminary data published Thursday by the National Statistics Institute. For the full year 2024, Mexico’s GDP expanded by 1.5%.
• Latin America’s second-biggest economy is widely expected to slow for a fourth consecutive year in 2025 amid government retrenchment and tight fiscal conditions coupled with concern over policy direction in both Mexico and the US. Mexico’s President Claudia Sheinbaum — who started her term in October — is continuing to pledge strong local demand, while the threat of US tariffs on Mexico’s exports rattles markets and halts investments.
• Most Mexico-watchers had long projected a challenging year for the economy given still-high borrowing costs and concerns that the arrival of companies in the country — through a practice known as “nearshoring” — had not happened at the explosive pace some predicted.
• More recent developments, such as the election of US President Donald Trump, have pressured the exchange rate and now pose upside risks to inflation while threatening the central bank’s current easing cycle.
• Banco de Mexico Governor Victoria Rodriguez said recently that the bank could accelerate the pace of easing in the year’s first policy meetings, which start Feb. 6, following a string of quarter-point cuts.

(Source: Financial Post)

• Food security in southern Mexico and parts of Central America is at risk due to extreme weather events such as droughts, according to a report released this Monday by the United Nations Food and Agriculture Organization (FAO). According to the organization, 14 countries in Latin America and the Caribbean may see restricted access to food, known as “undernourishment,” due to the climate crisis.
• In its report “Regional Overview of Food Security and Nutrition 2024,” the FAO particularly highlights the vulnerability of Central America’s “Dry Corridor” to prolonged droughts. This strip of territory extends from southern Mexico to a region of Panama, passing through Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica.
• “Fourteen countries are considered vulnerable because they have a higher probability of experiencing an impact on undernourishment due to these extreme phenomena,” emphasized the organization, with regional headquarters in Santiago, Chile, without revealing the complete list. When consulted, the FAO office also did not detail the reasons for not identifying the other nations at risk.
• In addition to droughts, heat waves and intense storms reduce agricultural productivity, disrupt supply chains, and increase food prices, the organization said in its study. Between 2019 and 2023, food insecurity – discontinuous access to food – increased by an average of 1.5% in vulnerable countries.
• “Climate variability and extreme events are a threat to the stability of food security and nutrition,” warned Mario Lubetkin, FAO Regional Representative, in a statement. However, hunger affected fewer people in Latin America in 2023, according to the report. That year, 6.2% of the region’s 733 million inhabitants suffered from lack of food, 2.9 million fewer people than in 2022.

(Source: Tico Times)

• The Federal Reserve held interest rates steady on Wednesday and gave little insight into when further reductions in borrowing costs may take place in an economy where inflation remains above target, growth continues, and the unemployment rate is low.
• After several months in which inflation data have largely moved sideways, the U.S. central bank dropped from its latest policy statement language saying that inflation "has made progress" towards the Fed's 2% inflation goal, noting only that the pace of price increases "remains elevated."
• Recent key inflation readings remain about half a percentage point or more above the Fed's target. Fed officials say they largely believe the progress in lowering inflation will resume this year but have now put rates on hold as they await data to confirm it.
• The unanimous decision to keep the overnight interest rate in the current 4.25%-4.50% range, coupled with the new statement, puts the Fed in a holding pattern as officials await further inflation and jobs data and clarity on the impact of President Donald Trump's policies.
• The decision to hold the policy rate steady was widely anticipated following three consecutive rate cuts in 2024 that reduced the Fed's benchmark rate by a full percentage point.

(Source: Reuters)

• Prices in British shops fell a bit less sharply in January than in December and food costs rose at the fastest monthly pace since April last year, according to a survey published on Tuesday.
• Annual shop price deflation of 0.7% this month was less than in December when prices were down by 1.0%, the sharpest drop in more than three years, the British Retail Consortium (BRC) said.
• Food prices were up by a monthly 0.5% in January, a stronger rise than December's 0.1% increase. Overall prices fell by 0.4% between December and January.
• Helen Dickinson, chief executive of the BRC noted that retailers might have to push up prices in response to the higher social security contribution requirements announced by finance minister Rachel Reeves along with an increase in the minimum wage and a new packaging levy.
• "Without action, UK households will feel the effects," Dickinson said calling on the government to offset the increase in costs for the sector by ensuring retailers do not have to pay more in property taxes.
• Britain's headline rate of inflation fell to 2.5% in December but is expected to rise again with some economists forecasting that it will hit 3% in January.

(Source: Reuters)

• Tropical Battery Company Limited (Tropical) has announced that the United States Patent and Trademark Office (USPTO) has granted trademark approvals, that will enable it to sell its branded products directly on Amazon's US platform. This development represents a strategic step in bringing Tropical Battery's trusted and innovative products to a broader audience.
• The approved trademarks encompass key product categories, including solar panels, batteries, automotive oils, and coolants. Although Tropical established its Amazon account over a year ago, operations were intentionally delayed meeting the platform's rigorous standards, including obtaining these critical trademark approvals.
• These approvals align with its recent investment in the United States through Rose Batteries, further strengthening its presence in this important market. Selling directly on Amazon is expected to boost its visibility, accessibility, and customer credibility, creating new growth opportunities.
• Rose Batteries, a recent addition to Tropical Battery’s portfolio, specializes in mission-critical custom battery packs tailored for a wide range of applications, including innovative utility grid solutions, industrial systems, medical devices, robotics, drones, and other demanding high-performance sectors.
• Tropical Battery’s stock price has increased by 8.8% since the start of the calendar year, fueled by strong year-to-date earnings growth and promising growth opportunities driven by its recent strategic developments. The stock closed Monday’s trading session at $2.73 implying a P/E of 17.3x last 12 months’ earnings, which is below the Junior Market Distribution Sector Average of 20.3x.

(Sources: JSE & NCBCM Research)

• As the Government pivots to growth, Prime Minister, Dr. the Most Hon. Andrew Holness, has renewed his commitment to establishing Jamaica as an international financial services centre.
• The Prime Minister speaking at the Jamaica Stock Exchange Investments & Capital Markets Conference held at The Jamaica Pegasus Hotel in New Kingston last Tuesday (January 21) noted that while Jamaica already has a robust financial sector, further modernisation is essential to meet international standards.
• The Government has made substantial progress by passing several key laws, including the Partnership General Act and the Trust and Corporate Services Providers Act. The final legislation required is the Limited Liabilities Company Act, which has been refined to ensure it meets global expectations.
• This Act is designed to provide a more business-friendly framework than the Companies Act. The PM further emphasized that these legislative measures aim to create a modern business environment that supports both local and foreign enterprises. This suite of legislation is expected to introduce new business structures, attract investments, and strengthen Jamaica’s position as an international business hub.
• In addition, the recent legislation that raised the participating share capital limit for Junior Market companies from $500Mn to $750Mn, calling it a strong demonstration of Jamaica's commitment to becoming a leading financial and business hub.
• The Junior Market currently features 48 listed companies with a market capitalisation of $148.50Bn. Its growth could attract MSMEs and stimulate capital market activity in the country.

(Sources: JIS &NCBCM Research)

• President Donald Trump has vowed that the United States would take back the Panama Canal but has given no further details on when or how he intended to reclaim the canal - which is the sovereign territory of an ally.
• "We need to increase support for American companies seeking to do business in Panama and throughout the Americas. Chinese companies must not be the sole bidders on contracts," Federal Maritime Commission Chair Louis E. Sola said in written testimony to be presented on Tuesday at the Senate Commerce Committee hearing on the Panama Canal.
• Senate Commerce Committee Chair Ted Cruz said ahead of the hearing: "The United States paid for and built the Panama Canal, but Panama is treating America unfairly and ceding control of key infrastructure to China." Previously, Trump has refused to rule out possible use of military force, drawing criticism from Washington's Latin American friends and foes alike.
• In Sola's testimony, he said: "The United States is not without options in addressing the growing presence of China and Chinese companies in Panama and throughout the Americas. Nor are we without options as they relate to the continued viability of the Canal." He also said it was crucial to protect the independence of the Panama Canal Authority.
• Panama's president, Jose Raul Mulino, said last week that Panama has administered the canal responsibly for world trade, including for the United States, and that it "is and will continue to be Panamanian." More than 40.0% of U.S. container traffic, valued at roughly $270 billion annually, transits the Panama Canal.

(Source: Reuters)