Tight monetary policy despite peak inflation

Inflation across most of Latin America has peaked, but this is mainly an energy story – core price pressures are proving much more persistent. And underlying price pressures are likely to ease only gradually over the coming months, which will keep inflation high – and higher than most expect this year. As a result, while the region’s central banks will turn to interest rate cuts over the coming quarters, we think they will tread more cautiously than most analysts are anticipating.