The recovery in Latin America is building momentum and all inflation-targeting economies in the region will post strong annual growth rates in the first half of this year. Meanwhile, there is a good chance of a spike in food and energy inflation in the near-term. We expect these two factors to prompt some precautionary interest rate hikes in Q2. Nonetheless, we think that any monetary tightening will be modest as concerns over strong exchange rates and capital inflows, and then slowing growth, linger. Brazil is likely to hike first, possibly in April, while Chile and Mexico are set to lag behind.