Publications

After the fastest monetary tightening cycle in decades (2022-2023), the main central banks have begun a process of lowering interest rates, with the “last mile” characterized by a cautious approach.

The ECB's meeting held last Thursday put a lot of focus on issues that have little to do with monetary policy, which is symptomatic of the central bank's comfort with the current level of interest rates.

The ECB kept rates unchanged and, with Lagarde’s slightly hawkish tone, reinforced the view that current levels likely mark the end of the cycle. The new projections point to more balanced risks, supported by the US–EU trade agreement.

At her press conference on Thursday after the ECB meeting, President Lagarde said goodbye to journalists and listeners wishing to hear more about a ‘wait and see’ holiday, an expression widely used by central bankers to imply that the next monetary policy moves will depend on how events unfold.

Global uncertainty, especially on geopolitical and commercial issues, has been creating a complex and atypical environment for Latin America in 2025. This has led to high market volatility, caution from monetary policy, and broader than normal ranges when forecasting economic variables.

In recent months, the main feature of the global economic outlook has been the increase in uncertainty. The erratic tariff policy of the American administration and the lack of precedent for recent protectionist shocks have made reading the economic outlook complicated.

The ECB cut rates to 2% with broad consensus and signaled the rate-cutting cycle may be nearing its end. While confident in the inflation path, high geopolitical and trade uncertainty keeps future decisions open.