We think that investors in Brazil are getting ahead of themselves by pricing in rate cuts as early as Q2. Despite February’s fall in inflation, core price pressures are still uncomfortably strong, which, alongside elevated fiscal risks, means that we think rate cuts are only likely to materialise towards the end of this year. Elsewhere, in Chile, the rejection of the tax reform bill has dealt another heavy blow to President Boric's reform agenda and could cause fiscal risks to flare up further down the road.
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