Argentina’s president, Mauricio Macri, has wasted little time in kick-starting his reform agenda following October’s mid-term elections, with a range of fiscal measures announced over the past month. These should help to narrow the budget deficit in 2018 and beyond. However, the good news has been tempered by a decision by the central bank to push up its inflation targets for the coming years. While much of the commentary has focused on the fact that this should allow monetary policy to be more accommodative, thus boosting near-term growth prospects, we’re more troubled by the longer-term consequences of the BCRA taking a softer stance on inflation.
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