BNP Paribas notes Latin American central banks are responding differently to renewed inflation risks. The easing cycle seems over in Chile and Peru, while Mexico’s central bank may deliver one last cut if Middle East tensions ease. Brazil has started a gradual easing cycle, whereas Colombia is expected to be the only major central bank to hike short-term rates.

Policy easing pauses as Colombia tightens

"On the monetary front, the easing cycle appears to have come to an end in Chile and Peru."

"In Mexico, the central bank has not ruled out a final rate cut, provided the situation in the Middle East stabilises, with the next meeting scheduled for 7 May."

"Brazil’s central bank began its monetary easing in March, although it may proceed at a more gradual pace than initially anticipated."

"Finally, against a backdrop of ongoing inflation, Colombia stands out as the only major central bank in Latin America expected to raise its short-term interest rates."

"Fiscal policy remains predominantly restrictive across Latin American countries."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)