EMERGING MARKETS-Latam FX retreats on hawkish Fed, Brazil awaited

    * Brazil's real comes off 1-year high
    * Mexican peso leads Latam losses
    * EM assets tumble 

 (Updates after Fed meeting)
    By Susan Mathew and Ambar Warrick
    June 16 (Reuters) - Latin American currencies retreated on
Wednesday after hawkish signals from the U.S. Federal Reserve
confirmed some market fears about rising inflation, while
investors also awaited a central bank decision in Brazil.
    Fed policymakers brought forward their timeline for raising
interest rates to 2023, and forecast inflation above the bank's
2% target.
    Even as the bank reaffirmed that policy would remain
accommodative in the near-term, emerging markets retreated as
fears of overheating inflation in the United States were
somewhat confirmed. 
    Mexico's peso was the worst performer among Latam
currencies, falling as much as 1.9% to a two-month low of
20.389, while Brazil's real came off a one-year high,
shedding 0.2%.
    "Given the economic backdrop, maximum policy accommodation
is hard to square with the levels of inflation and growth that
are present in the economy," said Charlie Ripley, senior
investment strategist for Allianz Investment Management.   
    "This inflection point in policy setting has come sooner
than expected with the economy running well above the initial
forecasts this year."
    Emerging markets fell across the board, as U.S. treasury
yields shot up after the meeting, narrowing the gap between
risky and risk-free debt. The MSCI's index of EM currencies
tumbled 0.3%.
    Losses in the real were somewhat mitigated as many expect
the Brazil central bank to hint at a more aggressive tightening
cycle, dropping commitment to a "partial normalization" of
policy when it meets later in the day.
    The bank is widely expected to deliver a third consecutive
interest rate hike, to 4.25%. 
    Noting the real's 5% appreciation since Brazil's May rate
hike, Citi analysts wrote: "We expect BRL to trade well in the
aftermath of the meeting, especially if they drop the "partial
normalization" guidance."
    Mexico's peso fell for a fourth straight session after
ratings agency S&P affirmed its rating a couple of notches above
junk, retaining a negative outlook.   
    Investors remained on edge about Peru, fearing sweeping
changes to mining laws in the world's No.2 copper producer
should socialist Pedro Castillo become president. 
    The sol currency fell 0.5%, heading toward all-time
lows. Average yields on Peru's local currency bonds closed on
Tuesday at 5.32%, a six-week high and up some 25 basis points so
far this week on the GBI-EM index.
    Castillo is claiming victory in elections though rival Keiko
Fujimori is fighting the result and an official winner is yet to
be declared.
    Key Latin American stock indexes and currencies:
                              Latest      Daily % change
 MSCI Emerging Markets         1364.68                -0.99
 MSCI LatAm                    2632.53                -0.65
 Brazil Bovespa              128982.66                -0.85
 Mexico IPC                   50558.59                -0.69
 Chile IPSA                    4352.48                -0.21
 Argentina MerVal             67124.79                0.178
 Colombia COLCAP               1251.94                -0.03 Currencies             Latest      Daily % change
 Brazil real                    5.0521                -0.23
 Mexico peso                   20.2825                -1.37
 Chile peso                      729.4                -0.39
 Colombia peso                 3680.24                 0.42
 Peru sol                       3.9007                -0.54
 Argentina peso                95.3100                -0.01
 (Reporting by Susan Mathew and Ambar Warrick in Bengaluru;
editing by Sujata Rao, David Gregorio and Nick Zieminski)