Policymakers in most of Latin America’s inflation-targeting countries have begun to signal an end to the current cycle of monetary tightening. In the very near term, we still expect the combination of rapid credit growth and rising inflation to trigger some small hikes as policymakers bid to calm fears in the market about overheated domestic demand. But with inflation set to ease back next year as the food price shock starts to unwind, we then expect rates to remain on hold throughout 2012 in Chile, Colombia and Peru, while the next major move in Brazilian rates will probably be down. Some further policy tightening may be imposed via other channels, notably macroprudential measures aimed at curbing credit growth. However, policymaking in 2012 looks set to be dominated by measures to ease currency appreciation as the authorities look to fight back in the ‘currency war’. As ever, the exception to this is Mexico, where a first hike is still a distant prospect.