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High inflation will limit room for interest rate cuts

GDP growth in Latin America will be among the weakest of any EM region this year and next, and is likely to disappoint consensus expectations. Persistently high inflation has prompted us to push back our expectations for the timing of the start of monetary easing cycles to later this year. And we think interest rates will follow a higher path than most anticipate over the next 12 months. Public debt-to-GDP ratios will start rising again this year and private sector debt problems are likely to pose a growing challenge.

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