Argentine central bank cuts basic rate to 28%; annual inflation target 15%

Wednesday, January 10th 2018 - 09:52 UTC

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Argentina’s central bank cut its policy rate to 28% from 28.75%, two weeks after relaxing its 2018 inflation target, the bank said on Tuesday. The bank’s first rate cut in 14 months came after a December 28 news conference announcing an official inflation target for this year of 15%, up from the bank’s previous target range of 8% to 12%. Read full article

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Enrique Massot
By lowering the tax rate by less than one per cent, Central Bank governor Federico Sturzenegger has defied cabinet chief Marcos Peña, who wanted a larger rate reduction.

Obviously lowering high interest rates could contribute to stimulate the economy, however it could direct the economic agents towards the dollar away from Lebac bonds, which are in pesos, and destabilize the economy's current precarious balance.

In an economy dominated by financial speculation and supported mainly by foreign borrowing as opposed to healthy growth, the avenues are narrow and lead only to a cliff.

Curious how those who, during the last government's term were calling Argentina a “serial defaulter” today cheer and ignore the massive foreign borrowing of a government that is, as we speak, creating the conditions for serious financial difficult - perhaps even a new default.
Jan 10th, 2018 - 07:48 pm - Link - Report abuse -1
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