Fighting inflation in Latin America

Central banks in Latin America can certainly not be accused of remaining passive in the face of rising price pressures. They were the first to begin hiking interest rates towards the end of last year, and since then have engaged in by far the most aggressive monetary tightening of any world region. Our analysts forecast the average policy rate in Latin America to rise from 5.7% at end-2020 to 15.5% at end-2022, a nearly 10 percentage point increase. In contrast, over the same period, interest rates in G7…

Argentina’s economy minister quits over inflation crisis

Argentina’s economy minister, Martin Guzman, the architect of a recent major debt deal with the International Monetary Fund, resigned on Saturday (Sunday AEST) as deep splits emerged in the ruling coalition over how to handle mounting economic crises. Mr Guzman, a minister since late 2019 and a close ally of President Alberto Fernandez, posted a letter on Twitter announcing his decision, adding he maintained “confidence in my vision of the path Argentina should follow”. The centre-left president is facing…

Four Scenarios for Argentina’s Inflation Crisis

History suggests that inflation’s path will determine the outcome of the 2023 elections. It would be an understatement to say that Argentina has a pathological relationship with inflation. Going back to the mid-20th century, hardly any country in the Western Hemisphere has a worse track record. After hyperinflation in 1989, a currency peg during the 1990s held back price increases until they spiked again in 2002—and ever since inflation has been the country’s main macroeconomic issue. But inflation…

Who is to blame for the high inflation in Argentina

Most of the opinion polls tell us that after government corruption high inflation is the public’s Number One worry shortly followed by insecurity. We shouldn’t need the pollsters to tell us that. We can listen to the complaints in the lines at the supermarkets, read the headlines in newspapers, or hear the pronouncements of business leaders and political candidates. Inflation is terrible cancer that must be brought under control, we are constantly warned, or we face a bleak future and perhaps an economic…

Latam Investor – Argentines Macri Miracle Ends in Default

When Mauricio Macri was elected in 2015 it seemed to herald a new era for Argentina. Now it looks like being more of the same. In August Buenos Aires announced that it would reprofile its debt. In effect it’s another default, with investors having to take a write down for having lent to the Argentine government for the fourth time in the last 30 years and the ninth time since independence from Spain. It’s a sad culmination to a presidency that began with such hope. When Macri came to power his early moves,…

Reasons For The Weakness Of The Argentine Economy

Argentina has been “printing money for the people” MMT-style for many years. Its wrongly-called “inclusive monetary policy” of the past – print money to finance massive government spending – has driven the country to massive inflation and depression. This is the main reason why a country with an excellent education, human capital, and high economic potential has third-world inflation rates. Argentina inflation rose to 54% annualized this week. Bonds spreads soared to 854 Bps, the two-year…

The world’s leading inflation expert believes the current Argentine monetary policy changes are very positive

The American John Taylor is making reference to the inflationary goals and forecast interest rates. Taylor highlighted the planned application of zero growth in the monetary base and “first level transparency” of the local monetary authority. For the creator of one of the most important monetary policy principles of the last decades, “an inflation goal is not enough, a policy strategy is needed to follow” when establishing and complying with the inflation targeting scheme. John Taylor…

How Inflation Destroys a Civilisation

In 1971, President Nixon severed the final connection between gold and the U.S. dollar. Regular readers know that Bill has long warned of the unseen side effects of this decoupling. This was the rallying cry of what eventually became the largest fast-food strike in U.S. history. It all started in late 2012, when over 100 New York City fast-food workers walked off their jobs, demanding higher wages. Many made minimum wage. They were struggling to make ends meet as rent, utilities, medical care, and the overall…
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