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Financial conditions indices in Latin America

Author

Listed:
  • Eduardo Amaral
  • Rafael Guerra
  • Ilhyock Shim
  • Alexandre Tombini

Abstract

Global factors shaped financial conditions in Latin America in 2025, with exchange rate appreciations against the US dollar loosening conditions in most countries. Short-run monetary policy transmission in the region operates through financial conditions. In general, monetary easing leads to looser financial conditions and faster short-term output growth. Measurement of overall financial conditions depends on the methodologies and assumptions used to construct financial conditions indices (FCIs). Understanding these differences helps central banks to use FCIs as an input to monetary policy.

Suggested Citation

  • Eduardo Amaral & Rafael Guerra & Ilhyock Shim & Alexandre Tombini, 2025. "Financial conditions indices in Latin America," BIS Bulletins 113, Bank for International Settlements.
  • Handle: RePEc:bis:bisblt:113
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