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ECONOMY | 21-05-2020 01:41

Inflation expectations soar amid Central Bank stimulus

Plans to greatly expand the amount of money in circulation, while the demand for pesos is low and inflation is already at 45%, have increased concerns about rising prices.

Expectations for inflation in Argentina are soaring to their highest level in more than a decade, as the Central Bank intensifies stimulus measures and peso is being sold off.

A survey of citizens, carried out by the University of Torcuato Di Tella in Buenos Aires, found that Argentines expect consumer prices to rise by 50 percent over the next 12 months, the highest figure since the institution began polling.

President Alberto Fernández's government plans to inject a total of 1.7 billion pesos (US$25 billion) into the economy to offset the financial impact of the coronavirus pandemic. Plans to greatly expand the amount of money in circulation, while the demand for pesos is low and inflation is already at 45 percent, have increased concerns about rising prices.

Fernández declined to discuss the effects of his fiscal stimulus package at a press conference earlier this month. The government has not said how it intends to eliminate excess liquidity once the coronavirus pandemic subsides.

 

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by Patrick Gillespie, Bloomberg

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