Dovish Policy Stance To Persist

Despite the burgeoning threat of inflation we continue to expect the Banco Central de Honduras to maintain a dovish monetary policy stance in 2011 due to concerns over the country's sluggish economic recovery. As such, we are pencilling in only 50 basis points of hikes before year-end, taking the policy rate to 5.00% from 4.50%, where it has remained on hold since August 2009.

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