By Eliana Raszewsk for Bllomber/NewsweekArgentina’s central bank plans the biggest increase in the money supply since at least 2006 in a bid to keep local interest rates down.
Argentina aims to boost the amount of money in the economy, as measured by the M2 gauge, by 28 percent in December from a year earlier, the central bank said last month. Argentina targeted a 25 percent increase in December 2010 from a year ago, compared with 14.9 percent in the 12 months through November in Brazil and a 3.3 percent increase through November in the U.S.
Expanding the money supply may hold down the 10.81 percent benchmark Badlar rate, helping sustain the fastest economic expansion since 2005 while threatening to push up the world’s second-highest inflation, said Maximiliano Castillo Carrillo, a former manager of macroeconomic analysis at the central bank.
“What this tells the market is that they’ll try to keep interest rates down, as low as possible, to stimulate growth,” said Carrillo, who was at the bank from 2003 to 2009 and is now the director of the ACM research company in Buenos Aires. “It reflects a belief that.. Read Full Article
