Raising Interest Rates

With the plummet of commodity prices over the past year, economies throughout Latin America are now dealing with falling currency values and rising inflation. To combat these challenges, Peru just raised its interest rate for the first time in four years, and a Bloomberg Businessweek report says that other beleaguered central banks in the region may soon follow suit. “Peru was the first to pull the trigger and opened the door for going beyond the debate that was already taking place in Chile and Colombia,” Alejandro Cuadrado, global head of currency strategy at Banco Bilbao Vizcaya Argentaria SA, told Bloomberg. Barclays is predicting Colombia to move its rate from 4.5% to 5.0% by the end of the year to cope with inflation and believes Bogotá may need to make further rate hikes in 2016.