Rising net exports and real exchange rate developments are expected to lead to a modest recovery in Latin America. Global inflation remains low and monetary and fiscal policies were eased in most advanced economies during the past two years. However, with the recent acceleration in economic growth, some authorities have begun with a less lenient policy stance.
The Reserve Bank of Australia and the Bank of England have both recently increased their official central bank rates by 25 basis points. Both central banks cited the pickup in economic activity and increasing household borrowing as the main reasons for the tightening in their monetary policy.