We have less policy space, as price formation faces higher risks and inflation and its expectations have not been persistently below target. Even if the central scenario is of transitory increases in inflation in the US, a smooth path is unlikely, and financial markets will be subject to volatility episodes, exerting pressure on emerging markets’ financial conditions.
From a high of 6.7 percent in September and October 2018, average inflation for 2019 settled at 2.5 percent, well within the Government’s target range of 3.0 percent ± 1.0 percentage point for the year. Looking ahead, inflation is projected to average 2.9 % for both 2020 and 2021.