Financial conditions indices in Latin America

Eduardo Amaral, Rafael Guerra, Ilhyock Shim and Alexandre Tombini

No 113, BIS Bulletins from Bank for International Settlements

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.

Pages: 8 pages
Date: 2025-09-29
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