With the recovery well underway in most parts of Latin America the monetary tightening cycle has begun in some parts of the region. Policymakers in Brazil are in the midst of an aggressive tightening cycle as they front-load rate hikes in order to calm fears about overheating. Rates are also set to rise in Peru and Chile (where we expect a first hike this month), but the pace of tightening will be more gradual. Elsewhere however, we still expect rates to remain on hold in Colombia and Mexico until the second half of 2011.