LATAM WEEKAHEAD-Brazil Q4 inflation report key for rate outlook | Reuters

LATAM WEEKAHEAD-Brazil Q4 inflation report key for rate outlook

NEW YORK, Dec 20 (Reuters) - Investors will be cautiously monitoring a key fourth-quarter inflation report to be released by the Brazilian central bank on Tuesday, looking for signs that a recent batch of positive economic indicators might force policy-makers to raise rates earlier than expected.

The Brazilian central bank so far has said it is comfortable with the inflation outlook for 2010, which could allow the benchmark Selic rate to remain at its all-time low of 8.75 percent for a long time.

But investors in the market of interest rate futures have been pricing a hike of at least 150 basis points as early as in the first half of the year, especially after Brazilian data on retail sales and job creation exceeded expectations last week.

"With Brazil's economic recovery continuing to show strong momentum, anchored by solid domestic demand boosted by this year's strong jobs recovery, re-accelerating growth and fiscal stimulus, expectations are high that the central bank will begin hiking rates in the first half of 2020," RBC Capital Markets said in a report.

Other key data points investors will be watching this week are:

Tuesday Dec. 22

* Brazil - central bank Q4 inflation report

Wednesday Dec. 23

* Brazil - IPCA 15 inflation: Barclays Capital expects mid-month consumer inflation in Brazil to slow down to 0.3 percent in December, after a 0.44 percent reading in the previous period.


By Walter Brandimarte