06:50 AM EDT, 06/26/2024 (MT Newswires) -- With inflation plateauing (or expected to plateau) close to the ceiling of respective target ranges, Latin America's central banks are easing cautiously or opting for a pause, said Societe Generale.

This isn't the end of the easing cycle wherever applicable in the region. Real rates remain high and the United States Federal Reserve's easing cycle will eventually provide room for additional/significant easing over the next year, wrote the bank in a note to clients.

Some central banks in the region might wait a little longer for a sufficient signal from the Fed, while others might want to pre-empt those moves depending on the domestic situation and the stage of the easing cycle, stated SocGen.

The market's concern over the lack of efforts towards fiscal consolidation (Brazil and Colombia) and the policy mis-steps in Latina America (post Mexico's general election) are valid and are impacting inflation expectations, the local currencies and the bond yields, pointed SocGen. Central banks are mindful of these concerns and seem to have incorporated them into their decisions/communications. Now things depend on governments.

The bank marginally revises up its 2024 growth forecasts for most Latin Amercia's economies, largely owing to stronger-than-expected bounceback in Q1 2024. However, the outlook for growth hasn't improved since its last report. SocGen still expects most economies in the region to grow below trend in both this year and in 2025.

SocGen works with the assumption that policy risks will remain contained, keeping the macro-fiscal outlook stable. However, the idiosyncratic risks to the fiscal and investment outlook have certainly increased in the last few months, while the external dynamics remain challenging too.

The risks to the bank's inflation/rates projections are likely skewed to the upside.