March 1, 2014
When Argentina’s government said this February that inflation was higher than it previously thought, bonds rallied by up to 21%.
That may be odd, but this is Argentina. The news came as a relief.
The government said consumer prices rose 3.7% over the month of January compared with December, not far off some private sector estimates of close to 5%. Many analysts had feared less than 3%, which would have been a sign that Argentina’s president, Cristina Fernández de Kirchner, would continue to downplay inflation as a concern despite, some warnings it could surpass as much as 40% on an annual basis this year.
While higher inflation is a worry, the cheer was rooted in Argentina’s admittance
Argentina has so far dodged another long-predicted financial crisis. Many believe it might just avoid the worst this time—even if that means via the ballot box. By Charles Newbery