Jan 19, 2011
| Last Updated
Policy Miscalculation Could Prove Destabilizing
As we cautioned in our 2011 Outlook, falling behind the curve is a key internal risk in Latin America. Delays in macroeconomic tightening—amid above-trend economic growth and high confidence in the region and an inflationary and expansionist global backdrop—could further deteriorate the inflation outlook, increase the risk of overheating and worsen balance of payments dynamics. Moreover, as regional policy makers try to evade currency appreciation by avoiding aggressive rate hikes, this bifurcated policy choice could be detrimental to[...]
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