EMERGING MARKETS-Chile's peso drops after GDP downgrade; Brazil rate decision in focus

    * Brazil expected to cut rates by 75 basis points
    * Worst may be over for Brazil economy - Treasury secretary
    * Colombia could see ratings downgrades - Credit Suisse

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    June 17 (Reuters) - Chile's peso tumbled on Wednesday after
the central bank cut its economic growth outlook, while Brazil's
real weakened ahead of an interest rate decision due later in
the day.
   Against a stronger dollar the peso fell as much as
2.7% to a three-week low after the Chilean central bank revised
its 2020 economic growth estimation further into negative
territory, as the country enters its fourth month of lockdowns
due to the coronavirus.
    Overnight, the bank also maintained its benchmark interest
rate at 0.5%, as expected, after several successive cuts up
until late March, as it warned of a severe recession due to the
    Chilean stocks rose 1.5%, tracking strength in
global equities as investors banked on more monetary support to
pull the economy out of a virus-led recession, although fears of
a rising number of COVID-19 cases in the United States and China
kept caution alive.
    Brazil's real fell 0.4%, while stocks in the country
 rose ahead of a widely expected 75-basis-point interest
rate cut by the central bank.
     "We expect the monetary policy committee to signal that its
baseline scenario does not entail further Selic rate cuts, but
possibly without altogether eliminating the possibility of
delivering additional accommodation in the event of a
significant deviation from its central scenario," Goldman Sachs
analysts wrote in a note.
    Following data that showed Brazil's services activity
slumped at a record pace in April, Treasury Secretary Mansueto
Almeida said Brazil's economy may have seen its worst from the
pandemic in April and May, and is ready to resume the
government's agenda of privatizations and fiscal reforms in the
next two or three months.
    Colombia's peso was flat. The country's Fiscal Rule
Advisory Committee recently agreed to suspend government deficit
limits until 2022 so that the government has more space to meet
the fiscal needs created by the coronavirus pandemic.

    "The suspension and the expected increase in public debt
levels could be catalysts for further sovereign debt downgrades
if rating agencies deem unlikely that a credible fiscal
consolidation process could materialize after the shock
subsides," warned Credit Suisse analyst Juan Lorenzo Maldonadoa.
    All eyes are now on the upcoming medium-term fiscal
framework and in the 2021 budget, he said. 
    Mexico's peso and stocks  gave up session
gains to trade lower. 
    Key Latin American stock indexes and currencies at 1936 GMT:
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets     994.05     0.42
 MSCI LatAm               1955.12     0.55
 Brazil Bovespa          96128.11     2.78
 Mexico IPC              37878.52    -0.04
 Chile IPSA               3997.06     1.45
 Argentina MerVal        41075.38   -3.773
 Colombia COLCAP          1142.27    -1.07
      Currencies          Latest   Daily %
 Brazil real               5.2540    -0.44
 Mexico peso              22.3310    -0.10
 Chile peso                 796.6    -1.42
 Colombia peso            3747.02    -0.05
 Peru sol                  3.4968    -0.46
 Argentina peso           69.6700    -0.07
 (Reporting by Ambar Warrick in Bengaluru; Editing by Bernadette
Baum and Jonathan Oatis)