Buenos Aires Times

economy From 10 to 15%

Gov’t fends off attacks over backtrack on 2018 inflation target

The news added impetus to the dollar's seemingly endless rise. The greenback leapt over the 19-peso mark ending 19.46 pesos on Thursday.

Friday 29 December, 2017
The Central Bank on Thursday yielded to pressure to lower its 2018 inflation target from 10 to 15 percent. The announcement is seen as a significant defeat for Central Bank chief Federico Sturzenegger.
The Central Bank on Thursday yielded to pressure to lower its 2018 inflation target from 10 to 15 percent. The announcement is seen as a significant defeat for Central Bank chief Federico Sturzenegger. Foto:Télam

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As the government backtracked on its inflation targets for 2018, the dollar leapt over the 19-peso mark to end at 19.46 pesos on Thursday.

“Out of control and in demand until the end”, was how exchange brokers ABC Cambios described the “unstoppable” dollar, via Twitter.

In one month, the peso has lost 10.4 percent of its value.

Despite significant legislative wins in the Senate this week, the government was forced throughout the final work day of the year to hold off attacks from opposition leaders and the country’s most prominent economic gurus.

Cabinet Chief Marcos Peña told Radio Con Vos that the government “is absolutely certain” that “Argentina is going to grow next year”.

“We don’t see any reason to believe that the economy is going to fall into disarray. There is no concern,” he said, defending the government’s decision to force the Central Bank's hand on 2018 inflation targets.

A BLOW FOR STURZENEGGER

The Central Bank had eyed off a target of 17 percent for 2017, but to date official annual inflation sits at 24 percent.

Yesterday’s announcement was seen as a significant defeat for Central Bank boss Federico Sturzenegger who had resisted moves to lower the 2018 target from 10 to 15 percent.

Interest rates are now expected to fall as the government focuses less on the mother of all battles, an abrupt and permanent decrease in inflation, and more on economic growth.

Official 2018 predictions, as established in the Budget, are for an annual economic growth rate of 3.5 percent.

That same figure had been set for 2017 by former Economy minister Alfonso Prat Gay, with signs now pointing to a final official growth rate this year of 2.9 percent.

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