There are mounting signs that labour market conditions in many parts of Latin America are starting to loosen, but wages are still rising at a rapid pace and it will take time for wage growth to return to levels that are consistent with central banks’ inflation targets. This won’t stop central banks from lowering interest rates over the coming months, but easing cycles will probably be more gradual than most expect. This is especially the case in Mexico where inflation pressures from the labour market are strongest.
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