In Argentina, Central Bank’s Vanishing Profit Is Bullish
By: Camila Russo
(Bloomberg) -- Argentina’s central bank is poised to post its smallest profit in at least a decade this year. And that, curiously enough, may be a good thing.
Here’s why: The declining profit signals central bankers are taking a more aggressive tack in trying to curb an inflation rate that has for years been one of the highest in the world. They’re issuing more short-term debt, and selling it at interest rates that are almost double the levels of two years ago, to drain some of the excess cash in the economy that’s been fueling inflation. Those sales are swelling the interest payments the bank has to make, cutting into profits.
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