WRAPUP 2-Latin America pressed on rising inflation

* Canada says commodity boom here to stay

* IMF warns about Latam inflation, credit bubbles
(Adds comments by policymakers; rewrites throughout)

By Jason Lange and Louise Egan

CALGARY, Alberta, March 26 (Reuters) – The International
Monetary Fund warned Latin America on Saturday that economies
across the region are overheating, and Canada urged
policymakers not to underestimate the risks from rising
inflation.

The calls for caution contrasted with an upbeat mood among
many Latin American policymakers gathered in Canada for an
annual meeting of the Inter-American Development Bank.

Countries such as Brazil and Chile are enjoying sustained
strong economic growth, propelled by healthy demand for
commodity exports and double-digit expansion of bank lending to
their consumers.

The head of the IMF warned, however, that many Latin
American economies are growing too quickly, putting pressure on
a region where some countries suffered hyperinflation a few
decades ago.

“In many of them there are worrisome signs of overheating,”
IMF Managing Director Dominique Strauss-Kahn said in a blog,
adding a credit boom created the risk of asset price bubbles.

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For more stories on the IDB meetings: [ID:nN26106045]

For a graphic on the economy in the Americas:
http://r.reuters.com/fed78r

For a FACTBOX on global interest rates: [ID:nGLOBAL]

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Latin America’s economy will likely grow 4.5 percent this
year after expanding 6.1 percent in 2010, the Institute of
International Finance said.

In Brazil, house prices in some cities have nearly doubled
in just two years and the country’s currency has strengthened
nearly 10 percent since March 2010.

Bank of Canada Governor Mark Carney said the commodity boom
may last longer than many expect, fueled by surging demand from
emerging economies such as China and India.

“It’s a mistake to chalk this all up to cyclical” factors,
Carney said, referring to the argument that prices for raw
materials such as copper and grains have risen only because of
an upswing in the global business cycle.

“We’re in an environment that is probably going to be with
us for several decades,” he said during a panel discussion.

U.S. Treasury Secretary Timothy Geithner flew into Canada’s
snowy west for the meeting, but made no public remarks.

POLICY FRICTION

While the world recovers from recession, nations have
clashed over foreign exchange policy as many countries adjust
to ultra-low U.S. interest rates and China’s reluctance to let
its yuan currency appreciate freely. Investors seeking higher
yields have snatched up Latin American stocks and bonds.

Several countries in Latin America have seen an uptick in
inflation caused by high prices for food and other commodities.
Brazil’s inflation rate topped 6 percent in February for the
first time since November 2008.

Policymakers have said the rise will be temporary and worry
boosting rates could exacerbate the problem of too much money
pouring into their economies, which hurts exports by boosting
the value of their currencies.

“Monetary policy is not enough,” said Uruguayan central
bank chief Mario Bergara, who was on the same panel as Carney.

The Canadian, however, appeared unsettled by the view. “Can
I jump in on this? I’m a little nervous where we are headed,”
Carney said. “Monetary policy has to deal with inflationary
pressures, first and foremost,” he said.

He warned that misguided policies in emerging markets for
dealing with high inflation and a flood of capital could lead
to financial instability and weak global economic growth.

“That’s where one can make pretty big mistakes and delay
too much, both on the monetary side, or on the pretty
fundamental structural reforms,” he said.

“Argentina is growing very strongly, well above the global
average,” the country’s economy minister, Amado Boudou, said.

After Argentina’s economy surged 9.2 percent in 2010, the
government says inflation is running at 10 percent. Boudou
declined to comment on private-sector estimates showing
inflation closer to 25 percent.

Canada raised interest rates three times between June and
September of 2010. Brazil has pushed rates higher by three
percentage points since 2009 but economists polled by the
central bank this week nevertheless increased forecasts for
year-end inflation. Brazil also plans to cut government
spending to fight inflation.

Despite inflation concerns, countries are upbeat about
their growth prospects after being a key support for the global
recovery from recession.

“There is a sense that this region as a whole is doing
pretty well,” Chilean Finance Minister Felipe Larrain told
Reuters. “Latin America has emerged strengthened.”
(Additional reporting by Jeffrey Jones; editing by Peter
Galloway and Philip Barbara)

WRAPUP 2-Latin America pressed on rising inflation