Central Banking in Latin America: The Way Forward

Abstract

Latin America's central banks have made substantial progress towards delivering an environment of price stability that is supportive of sustainable economic growth. We review these achievements, and discuss remaining challenges facing central banking in the region. Where inflation remains high and volatile, achieving durable price stability will require making central banks more independent. Where inflation targeting regimes are well-established, remaining challenges surround assessments of economic slack, the communication of monetary policy, and clarifying the role of the exchange rate. Finally, macroprudential policies must be coordinated with existing objectives, and care taken to preserve the primacy of price stability.

Keywords: Central banking, Latin America, Central banks, Central bank autonomy, Monetary policy, Inflation targeting, Exchange markets, Intervention, Price stabilization, Macroprudential Policy, Financial stability, Central Banking, Monetary Policy, Macroprudential Policy, Latin America.

JEL Classification: E58