Central bank scorecard: Taking a stand

Sep 1, 2012

Latin America’s central banks are grappling with slowing growth, falling commodity prices and turning credit cycles – as well as dogged price pressures

By Karen Schwartz

Over the past year Latin America’s central bankers have found themselves, like so many times since the start of financial crisis, caught on the horns of a dilemma.

They have faced a delicate balancing act: standing ready to support their economies if adverse global shocks arise, while attempting to ensure that monetary policy keeps inflation expectations in check.

Today, as growth slows across the region – amid weakening external demand, falling commodity prices and a turning in local credit cycles – there is a sizeable risk that a sudden worsening in the global backdrop could cause a much sharper downturn in Latin America.

Concerns about the fragility of the global economy are increasingly front and center of the region’s policy agenda. Despite a respite in August, there remains widespread anxiety about a possible worsening of the eurozone crisis in the final quarter of the year, as well as...

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