In fact, the world is expected to grow nearly 5 percent by 2007 in a context of subdued inflation. Latin America benefits from a favorable global framework and is expected to increase 4 percent by next year. The region shows a sounder expansion than in previous recovery episodes since, in the past years, macroeconomic discipline has been strengthened.
This has made difficult the transmission of impulses coming from an accommodative monetary policy through adjustments in interest rates on loans to households and firms by banks. Interest rates do not have to be identical across the euro area, but it is unacceptable if significant differences arise because of the fragmentation of capital markets or the perception of a break-up of the euro area.