* 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 pandemic. 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 % change 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 % change 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 (interbank) (Reporting by Ambar Warrick in Bengaluru; Editing by Bernadette Baum and Jonathan Oatis)
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