Macroeconomic Forecast Argentina

Argentina's M2 money supply increased by 36.4% y-o-y in August 2011, to ARS301,120mn up from ARS299,517mn in July. In month-on-month terms this translates to an increase of 0.5% and provides significant upside pressure to our end-2011 forecast of ARS294,785mn although for the time being we are happy to stick with this forecast. In our view a continuation of this trend is likely to further stoke inflationary pressures; hence we expect the central bank to tighten monetary policy in the coming months.

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