* Mexico annual inflation rate at 6.25% in April * Brazil’s c.bank concerned with inflation expectations -minutes * Latam FX off 0.3%, stocks up 0.3% (Updates prices throughout, adds details, replaces analyst comment in paragraph 7) By Bansari Mayur Kamdar and Ankika Biswas May 9 (Reuters) – Mexico’s peso was flat on Tuesday as moderating inflation fueled hopes that the Bank of Mexico may soon end its monetary tightening, while investors keenly awaited this week’s U.S. inflation data. The peso edged 0.1% higher after data by statistics institute INEGI showed Mexico’s annual inflation slowed in April for the third straight month to 6.25%. “This means that another 25 basis point interest rate hike at next week’s Board meeting is no longer a certainty, but we think that a final increase in the policy rate is still more likely than not,” said Jason Tuvey, deputy chief emerging markets economist at Capital Economics, in a note. Banxico, as the Mexican central bank is known locally, raised interest rates 25 basis points to 11.25% in late March, signaling a moderation in the pace of its tightening cycle and a more dovish policy outlook. The Brazilian real rose 0.5% against the greenback. Minutes from Brazil’s central bank’s May 2-3 meeting showed concerns about inflation expectations, which have slightly deteriorated despite the government’s anticipated fiscal rules providing some relief to public debt prospects. “We expect the Copom (Monetary Policy Committee) to wait until the August meeting to start to gradually cut, but given the unsettled fiscal and quasi-fiscal policy outlook and drifting inflation expectations, a longer wait to start easing cannot be ruled out,” Goldman Sachs analysts said in a note. The central bank will hold a seminar in São Paulo next week, with attendees including European Central Bank President Christine Lagarde, to discuss challenges in conducting monetary policy. Congressman Cláudio Cajado is expected to present the text of the Brazilian government’s new fiscal framework by Thursday. Chile’s peso rose 0.8%, rebounding from Monday, after right-wing parties won a majority of votes to elect advisers to redraft the country’s constitution. The country’s central bank is expected to keep its benchmark interest rate at 11.25% at its next monetary policy meeting on Friday, a central bank poll showed. The dollar was largely range-bound ahead of U.S. debt ceiling talks later in the day, while traders assessed how a host of conflicting economic data will influence the U.S. monetary policy and global growth. Weak commodity prices also weighed on currencies of the resources-heavy region, with oil and copper prices sliding after data from top consumer China suggested weak growth and demand. Overall, the MSCI’s index for Latin American currencies was down 0.3%, with the Colombian peso shedding 1.3% as crude prices eased. Latin American stocks rose 0.3% and touched a three-week high, with shares of Natura & Co soaring 16% after the Brazilian personal products company reported a rise in operating profit. Key Latin American stock indexes and currencies at 1917 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 981.84 -0.77 MSCI LatAm 2279.72 0.3 Brazil Bovespa 107029.59 0.93 Mexico IPC 55275.41 0.44 Chile IPSA 5557.57 -0.91 Argentina MerVal 308652.78 1.398 Colombia COLCAP 1162.37 0.43 Currencies Latest Daily % change Brazil real 4.9894 0.49 Mexico peso 17.7625 0.15 Chile peso 789.8 0.81 Colombia peso 4565.5 -1.31 Peru sol 3.6781 0.24 Argentina peso (interbank) 228.0500 -0.18 Argentina peso (parallel) 466 0.86 (Reporting by Bansari Mayur Kamdar and Ankika Biswas in Bengaluru; Editing by Susan Fenton and Richard Chang)
