Sterilisation Won't Halt Inflation Spiral

BMI View: We believe that the Argentine central bank's efforts to sterilise the inflationary impact of ongoing currency intervention through local debt issuance will fail to halt further price rises, and instead raises the risks of the BCRA struggling to meet higher debt servicing obligations. With the country's distortionary macroeconomic policy mix likely to exacerbate inflationary pressures over the coming year, we caution that inflation remains at risk of spiralling out of control.

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