MarketWatch

MarketWatch

Economy & Policy

Irrational Policies, High Interest Rates Interest rates in many Latin American countries are very high, both in nominal and real terms. Rates in Argentina, of course, as it struggles to defend its currency and reconstitute monetary policy, are all over the place. Collapse in confidence in the peso is so complete that interest rates at any level are unlikely to revive the currency for long. Brazil's semi-independent Central Bank has begun easing rates after moving them up over a year ago to 19%. With inflation forecast at about 4% this year, base interest rates are 14% in real terms, a rate so high that few legitimate businesses can raise long term financing. The central bank arg

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