All inflation targeting economies in the region rebounded strongly in the second half of 2009, and should continue to grow at a decent pace in the first half of this year. At the same time, a spike in food and energy prices will cause headline inflation to rise over the coming months, although core pressures will remain subdued. We expect a strong start to 2010 to prompt some countries to begin raising interest rates. Brazil will lead the way, and the chance of a rate hike in March is evenly balanced. Chile, Colombia and Peru could follow suit in Q2/Q3. But we expect Mexico to remain on hold throughout 2010. And the bigger picture is that the aggressive rate hikes which are priced into the markets are unlikely to materialise.