Markets too quick to price in rate hikes

Following the last round of interest rate decisions, policymakers throughout Latin America signalled a pause in the easing cycle. We would not rule out further rate cuts later this year as the pace of recovery disappoints. But either way, the rate hikes currently priced into the market for the middle of next year are unlikely to materialise. Indeed, we expect rates throughout the region to remain at historic lows until Q4 2010.