The continuous rise of interest rates that the Fed has embarked on, is creating a situation in the developing sector that is rapidly leading to a blowout. Take the case of Argentina, where the central bank’s basic rate rose from 35% one year ago, to 75% today. The actual cost of borrowing for a small or medium business, however, is over 300%, according to reliable sources consulted by EIR. Official inflation stands at 99%; but in the last two weeks alone, the cost of eggs rose by 40%, of cheese by 50%, and so on. The average retirement pension a year ago was $450 per month; today it is $150, a two-thirds cut.
In neighboring Brazil, the rising Fed interest rate has pushed that country’s central bank rate up from 10.7% a year ago, to 13.75% today—a 30% rise. In February 2023 official inflation was “only” 5.8%.
In Mexico, the interest rate has nearly doubled, going from 6% to 11.25% over the same period, and official inflation stands at 7.9%.
