Economics
The Problem With Latin America’s Rate Hikes: They Barely Work
- From Brazil to Mexico, banks tighten faster than global peers
- Unstable politics and off-the-books economies limit the impact
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When it comes to raising interest rates to cool off pandemic inflation, Latin America’s central banks have been near the front of the global pack. They’re also among the worst-equipped for that task.
Half a dozen countries in the region have hiked borrowing costs since March. There’s been more tightening than in most parts of the world because prices are rising faster -- a problem highlighted Thursday when the region’s two biggest economies posted new inflation data.