The strong support for Brazil’s new fiscal framework in a vote in the lower house this week suggests that there’s more political appetite for austerity than we had anticipated. And, taken together with the lower-than-expected inflation figures out this week, the arguments in favour of an earlier start to the central bank’s easing cycle than we currently forecast (Q4) are growing. Elsewhere, the decision by Chile's central bank to raise banks’ capital requirements this week points to concerns about rising non-performing loans. While there are pockets of vulnerability in the household sector, the banking sector as a whole looks well placed to deal with these.
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