Archive

January 28, 2026
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Canada: Trade Risk and Rate Flexibility

  • The Bank of Canada held rates at 2.25%, as expected, with this second straight hold signalling a cautious pause as policy is firmly data‑dependent.
  • With core inflation easing but still near 2.5% and unemployment elevated, rates are likely on hold through 2026 unless inflation or growth deviates materially.
  • Trade uncertainty and CUSMA talks are key wildcards; the next move (probably a hike) is seen in 2027 if growth and inflation remain near projections.
January 28, 2026
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Data-Driven Fed Holds the Line

  • The Fed holds rates at 3.50%-3.75% as expected, pausing after three cuts. Two dissenters sought 25bp reductions, highlighting debate on easing timing.
  • Inflation remains the key hurdle: Core PCE ~2.8-3.0%. Downside risks from unemployment were removed, delaying cuts.
  • Two cuts are expected in H1 2026 (April-June), but tariff pass-through and wage pressures risk fewer/delayed cuts; labour weakness could accelerate easing.
January 28, 2026
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Brazil Holding Before the Cut

  • Brazil's Copom holds Selic at 15% as expected. It signalled easing in March if inflation moderates, while maintaining a contractionary stance through 2026.
  • Deanchored expectations (4.0% 2026, 3.8% 2027) constrain the cutting pace despite headline inflation below 4.5%.
  • Fiscal stimulus vs monetary restraint dilemma: a 50bp March cut is likely, but the pace depends on labour market cooling and currency stability.
January 27, 2026
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Chile Holds Steady, Cuts Deferred

  • Chile's central bank held the policy rate at 4.5% as the consensus expected, signalling a pause in the easing cycle rather than a shift to tightening.
  • With inflation falling toward the 3% target and expectations anchored, the decision preserves scope for future cuts if activity data weaken further.
  • Forward guidance points to the March IPoM as the key juncture for potential renewed easing, keeping a gradual rate-cut path in play but highly data-dependent.

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