Bolivia’s coup attempt, Lula attacks the BCB

The coup attempt in Bolivia this week shouldn’t be read as a warning sign for other Latin American countries. But it does shine a spotlight on institutional fragility in the region – as evidenced by the recent sell-off in Mexico’s financial markets on concerns of democratic backsliding. For Bolivia, heightened political risk may harm its ability to take advantage of its lithium deposits and makes a sovereign default even more likely. Elsewhere, the pushback from Brazil’s central bank against President Lula's calls for lower interest rates re-affirms our view that monetary easing isn’t on the cards this year – and possibly next year too.