Policymakers in Latin America face an awkward choice. Either they must fight inflation with stronger currencies but at the expense of a squeeze on domestic manufacturers, or they can limit currency appreciation but at the risk of higher inflation over the next year or so. We expect most to adopt a middle ground. Accordingly, interest rates will be hiked in most countries, but by less than the market currently expects. Meanwhile, inflation and bubbles will remain a nagging threat. Mexico is the happy exception to all of this.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services