MercoPress. South Atlantic News Agency
Argentina hikes benchmark rate to 40%, easing pressure on the Peso but not on inflation
Argentina's Central Bank on Friday hiked its benchmark interest rate to 40% to support the peso, the third such hike in just over a week and one day after the currency plunged in value. Following the decision, the peso -- which has lost more than 10% of its value in the past month -- opened 6% higher against the dollar. Read full article
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Disclaimer & comment rules“The Central Bank also ratified an inflation target of 15% for 2018, although the IMF has projected it will reach 19% and private consulting firms see it reaching 20%.”
May 05th, 2018 - 07:01 pm - Link - Report abuse 0This information alone shows a government in deep denial of what's developing under their nose.
Does minister Dujovne really believes inflation in 2018 will be just 15 per cent when the first fourth months and every single analyst point to higher numbers?
Additionally, the measures announced to stop the recent stampede are nothing but short-term patches that address the financial side but fail to address the real economy--the only able to provide a foundation for financial stability.
@EM
May 06th, 2018 - 02:19 pm - Link - Report abuse +1You'd like to see Macri gone ASAP, right? If the congress could find some way to get him out immediately and replace him with someone better for the economy, wouldn't that be a good thing to do?
@DT
May 06th, 2018 - 04:03 pm - Link - Report abuse 0Excellent question. Watching from afar still another calamity abating on my home country is painful.
Long before the November 2015 election, I was concerned about what Mauricio Macri would do to Argentina as president. However, I would've preferred that my concerns had revealed baseless.
The country's economy is rapidly deteriorating, and a main concern at this point is that a collapse is avoided -- no matter who is at the helm.
Macri and his team still have an opportunity to get out of their ivory tower and take a realistic view of the situation they have arrived to.
Before time runs out, they could urgently call in all the country’s economic, social and political sectors and attempt to reach a national agreement on the necessary measures to revert the current course.
If they do it, the strain on Argentina’s 44-million population will still be enormous -- If they don't, the consequences are unpredictable. It’s not worth to blindly keep the current course of action just to protect the privileges of 1,000 families.
Reekie,
May 09th, 2018 - 06:44 pm - Link - Report abuse 0“The country's economy is rapidly deteriorating”
Actually I believe that most of the figures indicate a gradual improvement. But you made the original claim so can you support it with some statistics that indicate the state of the economy such growth of GDP, industrial output, unemployment etc.?
An analogy:
Scenario 1: You are a student and have minimal income from benefits or some part time work, you are borrowing to make ends meet and are renting cheap accommodation in a dodgy part of town because that is all you can afford. Even though your energy bills are subsidised, you have reached the point of not even paying the minimum on your credit cards and are ignoring the inevitable letters.
Scenario 2: You graduate and get offered a reasonable job. On the basis of having an income you buy a house in a nicer part of town but you need a mortgage. You are now economically active and have an income that promises to rise if you work well, but the mortgage means that your debt has increased dramatically and in order to service that debt you need to pay a substantial amount of your new income on the mortgage. You also have extra expenses because you want to decorate and furnish the house and your energy bills are no longer subsidised.
In your opinion B is much worse than A because the debt is so much larger, you still have to pay off those credit cards and your energy costs have increased but you are missing the fact that that debt is now being serviced by your economic activity and a large part of it is an investment in your future infrastructure and you are now more comfortable even if your free cash has not increased that much (yet).
The debt is important but it is not the only factor. If Macri had done nothing to improve economic activity or infrastructure then I'd agree that he was continuing on a path to ruin, but the evidence is that the economy is actually growing and remember he is now servicing the credit card bills that CFK refused to pay.
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