EMERGING MARKETS-Latam markets kick off rate decision-week on broadly positive note

By Shashwat Chauhan and Purvi Agarwal

March 17 (Reuters) - Most Latin American currencies strengthened against a weakening dollar on Monday, kicking off a week packed with interest rate decisions globally, including in Brazil, Chile and the United States.

The centerpiece of the week is the Federal Reserve's interest rate decision on Wednesday, with markets widely expecting the central bank to hold its rate steady.

"We should worry about whether the Fed fails to live up to the market's hope for two or three rate cuts this year, borne by suspicion the Fed is not 'in charge' anymore, having relinquished control of macroeconomic policy to the Trump administration," said Thierry Wizman, global FX and rates strategist at Macquarie.

Data on Monday showed U.S. retail sales rebounded marginally in February.

The back-and-forth in U.S. trade policy has rattled markets of late, with the dollar dipping against most developed market peers. Latin American currencies - including Mexico's - have cashed in on the greenback's weakness.

Mexico's peso MXN= gave back early gains and was last down 0.2%, but hovered near its highest since November. The currency has been rebounding from its February lows when U.S. President Donald Trump pledged to impose 25% tariffs on all goods coming from Mexico, but later exempted them under an existing North American trade pact for a month.

"The most aggressive U.S. tariff proposals are unlikely to materialize fully, with the strength of the Mexican peso serving as an indicator that markets share this view and are looking through tariff-related noise," said analysts at Ashmore Group.

The OECD still forecast that Trump's tariff hikes will drag growth in Canada, Mexico and the U.S., while driving inflation higher.

Brazil's real BRL= strengthened 0.9% after briefly hitting an over four-month high in the run-up to a likely interest rate hike on Wednesday, bringing the Selic rate to 14.25%.

Central bank data released on Monday showed Brazil's economic activity grew more than expected in January.

Chile's peso CLP= firmed 0.9%, to its highest since October, ahead of a local interest rate decision on Friday, with expectations tilted towards the central bank holding rates steady at 5%.

Worries around a possible U.S. economic slowdown have weighed on global risk assets lately, though JP Morgan analysts note that EM stocks could be an "accidental beneficiary" of the scare, upgrading their recommendation to "neutral" from "underweight."

MSCI's index for Latin American stocks .MILA00000PUS advanced 1.5%, taking its yearly gains to nearly 15%, far outperforming the U.S. S&P 500 .SPX, which has fallen almost 4% year-to-date and slipped into a technical correction last week.

Local bourses had an upbeat start to the week, with Brazil's Bovespa .BVSP gaining 1.6%, trading at its highest level this year.

The much-broader MSCI gauge for EM stocks .MSCIEF, meanwhile, advanced 1.1% as investors assessed plans from the Chinese government to boost domestic consumption.

Equity markets in Mexico were closed for a public holiday.

Elsewhere, Kenya's international bonds fell with Kenya and the International Monetary Fund (IMF) set to discuss a new lending programme and abandon the current one.

Key Latin American stock indexes and currencies: