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Between a rock and a hard place : the monetary policy dilemma in Latin America and the Caribbean (espagnol)

After a growth slowdown that lasted six years the Latin American and Caribbean (LAC) region is finally expected to resume positive growth in 2017, with market analysts forecasting real GDP growth of 1.2 percent for 2017 and 2.3 percent for 2018. In general, external factors that are typically important drivers of growth for the region (such as commodities prices and growth in China for SA) and growth in the U.S. for Mexico, Central America, and the Caribbean (MCC) are expected to remain roughly stable, or even show slight improvements. On the other hand, the gradual increase in world interest rates, led by rises in the Federal Funds Rate and the slow unwinding of the large increase in the Federal Reserve’s balance sheet since the Global Financial Crisis may eventually negatively affect global liquidity. Indeed, as emphasized in Chapter 1 of the report, a major macroeconomic worry in the region comes from the weak fiscal situation in most countries, particularly in SA. In this context, Chapter 2 – the core of this report – analyzes in detail how monetary policy has been conducted in the region and what may be its potential to support growth, without risking some hard-won gains in the battle against inflation. Specifically, the chapter is built around a critical monetary policy dilemma faced by many countries in the region.


  • Auteur

    Végh,Carlos A., Rojas,Diego, Morano,Luis, Friedheim,Diego

  • Date du document


  • Type de document

    Document de travail

  • Numéro du rapport


  • Volume


  • Total Volume(s)


  • Pays

    Amérique latine,

  • Région

    Amérique latine et Caraïbes,

  • Date de publication


  • Disclosure Status


  • Titre du rapport

    Between a rock and a hard place : the monetary policy dilemma in Latin America and the Caribbean

  • Mots clé

    monetary policy;inflation;cyclical monetary policy;foreign exchange market intervention;flexible exchange rate;nominal exchange rate;credible monetary policy framework;flexible exchange rate regime;adjustment need;real gdp;open capital account;terms of trade;interest rate policy;legal reserve requirement;independent monetary policy;fiscal deficit;domestic currencies;monetary authority;cyclical component;fixed exchange rate;increases in revenues;world interest rate;international credit rating;monetary policy instrument;Exchange Rates;negative shock;Exchange rate policies;open economy macroeconomics;exchange rate policy;flexible rate regime;credit market access;net capital flow;increase in inflation;stock of debt;deceleration in growth;independent central bank;international financial conditions;loss of credibility;commodity price data;cost of capital;inflation targeting regime;gdp growth rate;cost of service;privileges and immunity;fall in inflation;free capital mobility;cyclical fiscal policy;monetary policy autonomy;price of commodities;inflation targeting framework;order of business;high tax burden;poor growth performance;external factor;industrial country;fiscal situation;fiscal adjustment;public debt;impulse response;confidence interval;Fiscal policies;dollar debt;natural disaster;gross debt;business cycle;consensus forecast;positive growth;fiscal space;raise policy;high inflation;dilemma facing;tradable good;negative growth;



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